Interferon-induced transcription depends upon tyrosine phosphorylation, subsequent dimerization, and binding to DNA of STAT1. Other factors, including but not necessarily limited to CBP/p300, then bind within the C-terminal 38 amino acid transactivation domain (TAD) to activate transcription. We show that both tyrosine-phosphorylated STAT1alpha (full-length wild-type protein) and STAT1beta (lacking the TAD) stimulate in vitro transcription on a naked DNA template. Furthermore, in a system with purified proteins and naked DNA, STAT1alpha- and STAT1beta-dependent transcription is stimulated by the TRAP/Mediator co-activator complex. Thus STAT1, through some site other than the C-terminal TAD, can interact with TRAP/Mediator or some intermediate protein. Although both STAT1alpha and STAT1beta bind to known STAT sites within in vitro assembled chromatin templates, only STAT1alpha, and not STAT1beta, in cooperation with p300 and acetyl-CoA, stimulated in vitro transcription from chromatin. After interferon-gamma treatment, cells recruit STAT1alpha or -beta to the chromosomal interferon-1 gene, but only STAT1alpha-containing cells recruit p300 and stimulate transcription. We conclude that chromatin remodeling by p300 in vivo makes TRAP/Mediator effective in stimulating transcription.