The transcription factor CREB binds to a DNA element known as the cAMP-regulated enhancer (CRE). CREB is activated through phosphorylation by protein kinase A (PKA), but precisely how phosphorylation stimulates CREB function is unknown. One model is that phosphorylation may allow the recruitment of coactivators which then interact with basal transcription factors. We have previously identified a nuclear protein of M(r)265K, CBP, that binds specifically to the PKA-phosphorylated form of CREB. We have used fluorescence anisotropy measurements to define the equilibrium binding parameters of the phosphoCREB:CBP interaction and report here that CBP can activate transcription through a region in its carboxy terminus. The activation domain of CBP interacts with the basal transcription factor TFIIB through a domain that is conserved in the yeast coactivator ADA-1 (ref. 8). Consistent with its role as a coactivator, CBP augments the activity of phosphorylated CREB to activate transcription of cAMP-responsive genes.