The Arabidopsis Enhancer of Shoot Regeneration 1 (ESR1) gene regulates initiation of in vitro shoot regeneration. In this study, we investigated the transcription-modulating potential of ESR1. ESR1 induced reporter gene expression when overexpressed transiently in Arabidopsis leaf cells. Experiments using a fusion protein with the GAL4 DNA-binding domain located a transactivating domain of ESR1 within the C-terminal region. A nuclear localization signal was also located within the AP2/ERF domain. These results demonstrated that ESR1 functions as a transcriptional activator. Furthermore, we examined whether transcriptional modulation by ESR1 affects the in vitro shoot regeneration efficiency. Overexpression of ESR1 fused with the VP16 transactivating domain enhanced in vitro shoot regeneration as well as overexpressed wild-type ESR1 did, while overexpression of ESR1 fused with a strong repression domain, SRDX, inhibited shoot regeneration. These results suggest that ESR1 induces shoot regeneration through its transactivating ability.