Transcription of genes encoding molecular chaperones and folding enzymes in the endoplasmic reticulum (ER) is induced by accumulation of unfolded proteins in the ER. This intracellular signaling, known as the unfolded protein response (UPR), is mediated by the cis-acting ER stress response element (ERSE) in mammals. In addition to ER chaperones, the mammalian transcription factor CHOP (also called GADD153) is induced by ER stress. We report here that the transcription factor XBP-1 (also called TREB5) is also induced by ER stress and that induction of CHOP and XBP-1 is mediated by ERSE. The ERSE consensus sequence is CCAAT-N(9)-CCACG. As the general transcription factor NF-Y (also known as CBF) binds to CCAAT, CCACG is considered to provide specificity in the mammalian UPR. We recently found that the basic leucine zipper protein ATF6 isolated as a CCACG-binding protein is synthesized as a transmembrane protein in the ER, and ER stress-induced proteolysis produces a soluble form of ATF6 that translocates into the nucleus. We report here that overexpression of soluble ATF6 activates transcription of the CHOP and XBP-1 genes as well as of ER chaperone genes constitutively, whereas overexpression of a dominant negative mutant of ATF6 blocks the induction by ER stress. Furthermore, we demonstrated that soluble ATF6 binds directly to CCACG only when CCAAT exactly 9 bp upstream of CCACG is bound to NF-Y. Based on these and other findings, we concluded that specific and direct interactions between ATF6 and ERSE are critical for transcriptional induction not only of ER chaperones but also of CHOP and XBP-1.