During the final stage of epidermal differentiation, activation of keratinocyte transglutaminase results in covalent crosslinking of a variety of proteins to form highly protective cornified cell envelopes. We have studied the regulation of keratinocyte transglutaminase (TGK) gene expression in murine epidermal keratinocytes induced to terminally differentiate in vitro by increasing the level of extracellular Ca++ or treatment with the protein kinase C (PKC) activator 12-O-tetradecanoylphorbol-13-acetate (TPA). Raising extracellular Ca++ induces squamous differentiation of cultured keratinocytes and elicits a concentration-dependent increase in expression of TGK mRNA; keratinocytes grown for 24 h in 0.12 mM Ca++ medium express approximately 12 times as much TGK mRNA as basal cells (grown in 0.05 mM Ca++ medium), whereas cultures exposed to 1.4 mM Ca++ express approximately 17 times as much. TPA induces squamous differentiation and TGK mRNA even in basal keratinocyte cultures grown in 0.05 mM Ca++ medium, suggesting that expression of this differentiation marker is regulated by the PKC signaling pathway. Induction of TGK mRNA in response to TPA treatment is transient, reaching a peak at 6-8 h and returning to baseline by 24 h. In contrast, elevation of TGK mRNA levels in response to Ca++ persists for at least 24 h. The increased abundance of TGK mRNA reflects increased transcription of the TGK gene, based on nuclear run-on analysis of Ca(++)- and TPA-treated keratinocytes. Induction of TGK mRNA by either TPA or Ca++ is blocked in the presence of cycloheximide, suggesting that a PKC-dependent protein factor is required for TGK gene expression in response to both stimuli. Furthermore, the accumulation of TGK mRNA in keratinocytes treated with TPA or Ca++ is blocked in cells treated with the PKC inhibitor GF 109203X or bryostatin. These results suggest that the induction of TGK gene expression by Ca++ is dependent on PKC, providing further support for the hypothesis that PKC plays a central role in regulating the late stages of epidermal differentiation.