The mammalian genome contains tens of thousands of CG and TG repeat sequences that have high potential to form the nonclassical left-handed double-helical Z-DNA structure. Previously we showed that activation of the colony-stimulating factor 1 (CSF1) gene by the chromatin remodeling enzyme, BRG1, results in formation of Z-DNA at the TG repeat sequence located within the promoter. In this report, we show that the TG repeats are assembled in a positioned nucleosome in the silent CSF1 promoter and that activation by BRG1 disrupts this nucleosome and results in Z-DNA formation. Active transcription is not required for the formation of Z-DNA but does result in an expanded region of Z-DNA. Formation of sequences by both BRG1 and the Z-DNA is required for effective chromatin remodeling of the CSF1 promoter. We propose the Z-DNA formation induced by BRG1 promotes a transition from a transient and partial remodeling to a more extensive disruption of the canonical nucleosomal structure. The data presented in this report establish that Z-DNA formation is an important mechanism in modulating chromatin structure, in similarity to the activities of ATP-dependent remodelers and posttranslational histone modifications.