A protein module called the WW domain recognizes and binds to a short oligopeptide called the PY motif, PPxY, to mediate protein-protein interactions. The PY motif is present in the transcription activation domains of a wide range of transcription factors including c-Jun, AP-2, NF-E2, C/EBPalpha and PEBP2/CBF, suggesting that it plays an important role in transcriptional activation. We show here that mutation of the PY motif in the subregion of the activation domain of the DNA-binding subunit of PEBP2, PEBP2alpha, abolishes its transactivation function. Using yeast two-hybrid screening, we demonstrate that Yes-associated protein (YAP) binds to the PY motif of PEBP2alpha through its WW domain. The C-terminal region of YAP fused to the DNA-binding domain of GAL4 showed transactivation as strong as that of GAL4-VP16. Exogenously expressed YAP conferred transcription-stimulating activity on the PY motif fused to the GAL4 DNA-binding domain as well as to native PEBP2alpha. The osteocalcin promoter was stimulated by exogenous PEBP2alphaA and a dominant negative form of YAP strongly inhibited this activity, suggesting YAP involvement in this promoter activity in vivo. These results indicate that the PY motif is a novel transcription activation domain that functions by recruiting YAP as a strong transcription activator to target genes.