Purified, reconstituted chromatin templates containing regular, physiological nucleosome spacing were transcribed in vitro by RNA polymerase II along with the Gal4-VP16 activator. When Gal4-VP16 was prebound to DNA before reconstitution of either H1-deficient or H1-containing chromatin, the resulting templates were transcribed with a similar efficiency. Under such conditions, we observed long-range (1000 bp) activation of transcription in vitro with H1-containing chromatin, but not naked DNA templates. When Gal4-VP16 was added to preassembled chromatin, the H1-deficient chromatin was transcriptionally active, whereas the H1-containing chromatin, which possessed properties similar to native chromatin, was transcriptionally inert. We then mimicked DNA replication and chromatin assembly at a replication fork and found that Gal4-VP16 could potentiate transcription during, but not after, replication and assembly of histone H1-containing chromatin. These experiments provide biochemical data that support a DNA replication-dependent mechanism for reconfiguration of chromatin structure and activation of transcription by Gal4-VP16.