The precise mechanism by which glucocorticoid receptor (GR) regulates the transcription of its target genes is largely unknown. This is, in part, due to the lack of structural and functional information about GR's N-terminal activation function domain, AF1. Like many steroid hormone receptors (SHRs), the GR AF1 exists in an intrinsically disordered (ID) conformation or an ensemble of conformers that collectively appears to be unstructured. The GR AF1 is known to recruit several coregulatory proteins, including those from the basal transcriptional machinery, e.g., TATA box binding protein (TBP) that forms the basis for the multiprotein transcription initiation complex. However, the precise mechanism of this process is unknown. We have earlier shown that conditional folding of the GR AF1 is the key for its interactions with critical coactivator proteins. We hypothesize that binding of TBP to AF1 results in the structural rearrangement of the ID AF1 domain such that its surfaces become easily accessible for interaction with other coactivators. To test this hypothesis, we determined whether TBP binding-induced structure formation in the GR AF1 facilitates its interaction with steroid receptor coactivator-1 (SRC-1), a critical coactivator that is important for GR-mediated transcriptional activity. Our data show that stoichiometric binding of TBP induces significantly higher helical content at the expense of random coil configuration in the GR AF1. Further, we found that this induced AF1 conformation facilitates its interaction with SRC-1, and subsequent AF1-mediated transcriptional activity. Our results may provide a potential mechanism through which GR and by large other SHRs may regulate the expression of the GR-target genes.