We have examined the relationship between transcription and chromatin structure using a tandem array of the mouse mammary tumor virus (MMTV) promoter driving a ras reporter. The array was visualized as a distinctive fluorescent structure in live cells stably transformed with a green fluorescent protein (GFP)-tagged glucocorticoid receptor (GR), which localizes to the repeated MMTV elements after steroid hormone treatment. Also found at the array by immunofluorescence were two different steroid receptor coactivators (SRC1 and CBP) with acetyltransferase activity, a chromatin remodeler (BRG1), and two transcription factors (NFI and AP-2). Within 3 h after hormone addition, arrays visualized by GFP-GR or DNA fluorescent in situ hybridization (FISH) decondensed to varying degrees, in the most pronounced cases from a approximately 0.5-microm spot to form a fiber 1-10 microm long. Arrays later recondensed by 3-8 h of hormone treatment. The degree of decondensation was proportional to the amount of transcript produced by the array as detected by RNA FISH. Decondensation was blocked by two different drugs that inhibit polymerase II, 5,6-dichloro-1-beta-D-ribofuranosylbenzimidazole (DRB) and alpha-amanitin. These observations demonstrate a role for polymerase in producing and maintaining decondensed chromatin. They also support fiber-packing models of higher order structure and suggest that transcription from a natural promoter may occur at much higher DNA-packing densities than reported previously.