Chicken ovalbumin upstream promoter transcription factors (COUP-TFs) strongly inhibit transcriptional activation mediated by nuclear hormone receptors, including hepatocyte nuclear factor 4 (HNF-4). COUP-TFs repress HNF-4-dependent gene expression by competition with HNF-4 for common binding sites found in several regulatory regions. Here we show that promoters, such as the HNF-1 promoter, which are recognized by HNF-4 but not by COUP-TFs are activated by COUP-TFI and COUP-TFII in conjunction with HNF-4 more than 100-fold above basal levels, as opposed to about 8-fold activation by HNF-4 alone. This enhancement was strictly dependent on an intact HNF-4 E domain. In vitro and in vivo evidence suggests that COUP-TFs enhance HNF-4 activity by a mechanism that involves their physical interaction with the amino acid 227 to 271 region of HNF-4. Our results indicate that in certain promoters, COUP-TFs act as auxiliary cofactors for HNF-4, orienting the HNF-4 activation domain in a more efficient configuration to achieve enhanced transcriptional activity. These findings provide new insights into the regulatory functions of COUP-TFs, suggesting their involvement in the initial activation and subsequent high-level expression of hepatic regulators, as well as in the positive and negative modulation of downstream target genes.