Type II collagen is the major component of articular cartilage and is mainly synthesized by chondrocytes. Repeated sub-culturing of primary chondrocytes leads to reduction of type II collagen gene (Col2a1) expression, which mimics the process of chondrocyte dedifferentiation. Although the functional importance of Col2a1 expression has been extensively investigated, mechanism of transcriptional regulation during chondrocyte dedifferentiation is still unclear. In this study, we have investigated the crosstalk between cis-acting DNA element and transcription factor on Col2a1 expression in primary chondrocytes. Bioinformatic analysis revealed the potential regulatory regions in the Col2a1 genomic locus. Among them, promoter and 3' untranslated region (UTR) showed highly accessible chromatin architecture with enriched recruitment of active chromatin markers in primary chondrocytes. 3' UTR has a potent enhancer function which recruits Lef1 (Lymphoid enhancer binding factor 1) transcription factor, leading to juxtaposition of the 3' UTR with the promoter through gene looping resulting in up-regulation of Col2a1 gene transcription. Knock-down of endogenous Lef1 level significantly reduced the gene looping and subsequently down-regulated Col2a1 expression. However, these regulatory loci become inaccessible due to condensed chromatin architecture as chondrocytes dedifferentiate which was accompanied by a reduction of gene looping and down-regulation of Col2a1 expression. Our results indicate that Lef1 mediated looping between promoter and 3' UTR under the permissive chromatin architecture upregulates Col2a1 expression in primary chondrocytes.