HeLa cell nuclear extracts were used to study the mechanism of activation of RNA polymerase II-mediated transcription by the N-terminal transactivation domain (tau 1) Of the glucocorticoid receptor in vitro, When fused to the Ga14 DNA-binding domain, the tau 1 domain activated transcription approximately 9-fold in HeLa nuclear extracts, Using heat treatment to inactivate transcription factor IID (TFIID) in the extract, it was shown that the addition of purified TFIID complex, but not the TATA-binding protein alone, was sufficient to restore this level of activation, The tau 1 domain was shown to interact directly with the TFIID complex, This interaction was markedly reduced by a mutation in the tau 1 domain that reduces its activity. Furthermore, the interaction was specific for the TFIID complex, since no interaction was seen with TFIIIB, an analogous protein complex involved in RNA polymerase III transcription, The tau 1 domain was further shown to interact with the TATA-binding protein subunit of the TFIID complex, These results suggest a mechanism by which the GB tau 1 domain might contribute to gene activation by recruitment of the TFIID complex to target promoters.