Transcription factors play a crucial role in the development of various tissues. In particular, the transcription factors of the basic helix-loop-helix (bHLH) family are crucial regulators of neurodifferentiation. Previous studies suggested that the bHLH transcription factor Hand2 is essential for sympathetic nervous system neuron differentiation in vivo, but the molecular mechanisms involved have not been well elucidated. It is important for understanding their mode of action in cellular differentiation to clarify how these bHLH factors regulate distinct transcriptional targets in a temporally and spatially controlled manner. Recent reports on ES cell differentiation suggested that its molecular mechanism mimics that of in vivo neurogenesis. However, the diverse nature of ES cell populations has prevented efficient analysis. To address this issue, we previously established a cell line in P19 embryonal carcinoma (EC) cells. Efficient sympathetic nervous system (SNS) neuron differentiation is induced in the cell line. Using this cell line, we succeeded in showing that the interaction of bHLH transcription factor Hand2 with E2a is required for transcription of Phox2b, which is essential for autonomic nervous system neuron development, and this binding activates this expression in SNS differentiation. Moreover, we also demonstrated that Hes5 regulated the transcription of Phox2b as a negative regulator and it inhibited the SNS differentiation. These findings have enabled us to determine the novel regulatory mechanism of Phox2b in SNS differentiation. (C) 2011 Elsevier Inc. All rights reserved.