The alpha chain of the nascent polypeptide-associated complex (alpha-NAC) coactivator was shown to potentiate the activity of the homodimeric c-Jun activator, while transcription mediated by the c-Fos/c-Jun heterodimer was unaffected. The use of deletion mutants in pull-down assays revealed that alpha-NAC interacted with amino acids 1 to 89 of the c-Jun protein and that the coactivator could interact with both the unphosphorylated and the serine 73-phosphorylated form of c-Jun. N-terminal-deleted c-Jun protein failed to interact with alpha-NAC in mammalian two-hybrid assays, while mutant c-Jun proteins lacking the leucine zipper or the basic domain retained interaction with alpha-NAC in vivo. Kinetics studies with purified c-Jun homodimer and recombinant alpha-NAC proteins allowed determination of the mechanism of coactivation by alpha-NAC: the coactivator stabilized the AP-1 complex formed by the c-Jun homodimer on its DNA recognition sequence through an eightfold reduction in the dissociation constant (kd) of the complex. This effect of alpha-NAC was specific, because alpha-NAC could not stabilize the interactions of JunB or Sp1 with their cognate binding sites. Interestingly, the expression of alpha-NAC was first detected at 14.5 to 15 days postconception, concomitantly with the onset of ossification during embryogenesis. The alpha-NAC protein was specifically expressed in differentiated osteoblasts at the centers of ossification. Thus, the alpha-NAC gene product exhibits the properties of a developmentally regulated, bone-specific transcriptional coactivator.