Most cancers originate as a result of aberrant gene expression in mainly glandular epithelial tissues leading to defects in epithelial cell differentiation. The latter is governed by distinct sets of transcriptional regulators. Here we report the characterization of epithelium-specific Ets factor, family member 3 (ESE-3), a novel member of the ESE subfamily of Ets transcription factors. ESE-3 shows highest homology to two other epithelium restricted Ets factors, ESE-1 and ESE-2. ESE-3, like ESE-1 and ESE-2, is exclusively expressed in a subset of epithelial cells with highest expression in glandular epithelium such as prostate, pancreas, salivary gland, and trachea. A potential role in branching morphogenesis is suggested, since ESE-3 transactivates the c-MET promoter via three high affinity binding sites. Additionally, ESE-3 binding to DNA sequences in the promoters of several glandular epithelium-specific genes suggests a role for ESE-3 in later stages of glandular epithelium differentiation. Although ESE-3 and ESE-1 bind with similar affinity to various Ets binding sites, ESE-3 and ESE-1 differ significantly in their ability to transactivate the promoters containing these sites. Our results support the notion that ESE-1, ESE-2, and ESE-3 represent a unique epithelium-specific subfamily of Ets factors that have critical but distinct functions in epithelial cell differentiation and proliferation.