Cortactin, a filamentous actin (F-actin)-associated protein and prominent substrate of Src, is implicated in progression of breast tumours through gene amplification at chromosome 11q13. However, the function of cortactin remains obscure. Here we show that cortactin co-localizes with the Arp2/3 complex, a de novo actin nucleator, at dynamic particulate structures enriched with actin filaments. Cortactin binds directly to the Arp2/3 complex and activates it to promote nucleation of actin filaments. The interaction of cortactin with the Arp2/3 complex occurs at an amino-terminal domain that is rich in acidic amino acids. Mutations in a conserved amino-acid sequence of DDW abolish both the interaction with the Arp2/3 complex and complex activation. The N-terminal domain is not only essential but also sufficient to target cortactin to actin-enriched patches within cells. Interestingly, the ability of cortactin to activate the Arp2/3 complex depends on an activity for F-actin binding, which is almost 20-fold higher than that of the Arp2/3 complex. Our data indicate a new mechanism for activation of actin polymerization involving an enhanced interaction between the Arp2/3 complex and actin filaments.