Activation of the murine-mammary-tumour virus (MMTV) promoter by the glucocorticoid receptor (GR) is associated with a chromatin structural transition in the B nucleosome region of the viral long terminal repeat (LTR). We have reconstituted this nucleoprotein transition with chromatin assembled on MMTV LTR DNA with Drosophila embryo extracts, purified GR, and HeLa nuclear extract. Chromatin remodelling in vitro is ATP-dependent and maps to a region identical with that found in vivo. We demonstrate specific, glucocorticoid response element dependent, binding of purified GR to a large, multi-nucleosome MMTV chromatin array and show that GR-dependent chromatin remodelling is a multistep process. In the absence of ATP, GR binds to multiple sites on the chromatin array and inhibits nuclease access to GR recognition sites. On the addition of ATP, GR induces remodelling resulting in a large increase in access of enzymes to their sites within the transition region. These findings are complemented by studies in living cells; using a tandem array of MMTV-Ras reporter elements and a form of GR labelled with the green fluorescent protein, we have observed direct targeting of the receptor to response elements in live mouse cells. Whereas the ligand-activated receptor is associated with the MMTV promoter for observable periods, photobleaching experiments provide direct evidence that the hormone-occupied receptor undergoes rapid exchange between chromatin and the nucleoplasmic compartment. The results both in vitro and in vivo are consistent with a dynamic model ('hit and run') in which GR first binds to chromatin after ligand activation, recruits a remodelling activity and is then lost from the template.