Transcriptional regulation by estrogen receptor alpha (ER alpha) involves protein-protein interactions among the receptor, its associated coactivators and the RNA polymerase II transcriptional machinery. We have used an in vitro chromatin assembly and transcription system to examine the biochemistry of interactions among ER alpha, the SRC proteins and p300/CBP. Using polypeptides designed to block specific receptor- cofactor or cofactor-cofactor interactions, we show that interactions among ER alpha, its coactivators and the RNA pol II machinery are all required for ER alpha- mediated transcription. Furthermore, we show that ER alpha -SRC-p300/CBP interactions are necessary and sufficient for the targeted acetylation of nucleosomal histones on estrogen-responsive promoters in the absence of transcription. The protein-protein interactions required for histone acetylation constitute a subset of the interactions required for transcriptional activation. Finally, we show that the major role of SRC-p300/CBP interactions is to enhance ER alpha- mediated transcription initiation, and they have little or no role in stimulating subsequent rounds of transcription. Together, our results indicate a specific role for the SRC and p300/CBP coactivators, as well as targeted histone acetylation, in ER alpha -mediated transcription.