The ubiquitous transcription factor C/EBP beta functions as an activator or inhibitor depending on the ratios of three isoforms translated from in-frame AUG. We have identified C/EBP binding sites in both light and heavy chain immunoglobulin (Ig) promoters. Of the two C/EBP sites present in the light chain promoter, the upstream site is essential for promoter function. Mutation of this element drastically decreases promoter activity, despite the presence of an intact octamer element. Both light and heavy chain promoters were activated or inhibited by C/EBP beta isoforms in transfected cells according to the transactivation ability of these isoforms. Endogenous IgM mRNA and protein were repressed by the inhibitory form, C/EBP beta-3, indicating a general role of C/EBP beta, in the regulation of Ig genes. We show that C/EBP beta-3 forms ternary complexes with Oct-1 and Oct-2 on heavy and light chain promoters, and also interacts with both octamer-binding proteins in the absence of DNA. This suggests that interference of Oct-1/Oct-2 function by C/EBP beta-3 may account for the observed repression. Inhibition by C/EBP beta-3 occurs not only through a C/EBP site, but also through the octamer element, as shown by co-transfection experiments with heterologous promoter constructs. Thus, C/EBP beta regulates Ig promoter transcription by modulating octamer factor activity.