The human osteocalcin gene is transcriptionally repressed by glucocorticoids. A specific binding element for the glucocorticoid receptor (GR) overlapping the TATA box of the human osteocalcin promoter has previously been identified. In the present study, the function of this element has been further characterized by competitive gel mobility-shift assay and transfection experiments. The GR and TATA-binding protein (TBP) bound to the cognate overlapping elements in a mutually exclusive manner. The GR preferentially inhibited the binding of TBP. The isolated DNA-binding domain of the GR is sufficient to compete for TBP binding. The integrity of both half-sites of the glucocorticoid response element (GRE) is required to effectively compete for TBP binding, and competitive binding of the GR is dependent on dimerization. Transient overexpression of TBP overrides the transcriptional repression of the osteocalcin promoter by glucocorticoids. We conclude that the repressive effect of glucocorticoids on this promoter is the result of competitive DNA binding to a basal transcriptional element and that it does not appear to require direct protein-protein interaction between the competitive factors.