The Wilms tumor gene WT1 encodes a zinc finger transcription factor that is required for normal kidney development. WT1 was identified as a transcriptional repressor, based on its suppression of promoter reporters, but analysis of native transcripts using high density microarrays has uncovered transcriptional activation, rather than repression, of potential target genes. We report here that WT1 binds to the transcriptional coactivator CBP, leading to synergistic activation of a physiologically relevant promoter. The physical interaction between WT1 and CBP is evident in vitro and in vivo, and the two proteins are co-immunoprecipitated from embryonic rat kidney cells. The WT1-CBP association requires the first two zinc fingers of WT1 and the adenovirus 5 E1A-binding domain of CBP. Overexpression of this domain of CBP is sufficient to inhibit WT1-mediated transcriptional activation of a promoter reporter, as is co-transfection of E1A. Retrovirally driven expression of either the CBP fragment or of E1A in human hematopoietic cells suppresses the induction by WT1 of its endogenous target gene, p21(Cip1). These observations support a model of WT1 as a transcriptional activator of genes required for cellular differentiation.