Expression of human T-cell leukemia virus type 1 (HTLV-1) is regulated by the viral transcriptional activator Tax. Tax activates viral transcription through interaction with the cellular transcription factor CREB and the coactivators CBP/p300. One key property of the coactivators is the presence of histone acetyltransferase (HAT) activity, which enables p300/CBP to modify nucleosome structure. The data presented in this manuscript demonstrate that full-length p300 and CBP facilitate transcription of a reconstituted chromatin template in the presence of Tax and CREB. The ability of p300 and CBP to activate transcription from the chromatin template is dependent upon the HAT activity. Moreover, the coactivator HAT activity must be tethered to the template by Tax and CREB, since a p300 mutant that fails to interact with Tax did not facilitate transcription or acetylate histones. p300 acetylates histones H3 and H4 within nucleosomes located in the promoter and 5' proximal regions of the template. Nucleosome acetylation is accompanied by an increase in the level of binding of RNA polymerase II transcription factor TFIID and RNA polymerase II to the promoter. Interestingly, we found distinct transcriptional activities between CBP and p300. CBP, but not p300, possesses an N-terminal activation domain which directly activates Tax-mediated HTLV-1 transcription from a naked DNA template. Finally, using the chromatin immunoprecipitation assay, we provide the first direct experimental evidence that p300 and CBP are associated with the HTLV-1 long terminal repeat in vivo.