The homeodomain transcription factor Crx is required for expression of many photoreceptor genes in the mammalian retina. The mechanism by which Crx activates transcription remains to be determined. Using protein-protein interaction assays, Crx was found to interact with three co-activator proteins (complexes): STAGA, Cbp and p300, all of which possess histone acetyl-transferase (HAT) activity. To determine the role of Crx-HAT interactions in target gene chromatin modification and transcriptional activation, quantitative RT-PCR and chromatin immunoprecipitation were performed on Crx target genes, rod and cone opsins , in developing mouse retina. Although cone opsins are transcribed earlier than rhodopsin during development, the transcription of each gene is preceded by the same sequence of events in their promoter and enhancer regions: (i) binding of Crx, followed by (ii) binding of HATs, (iii) the acetylation of histone H3, then (iv) binding of other photoreceptor transcription factors (Nrl and Nr2e3) and RNA polymerase II. In Crx knockout mice (Crx-/-), the association of HATs and AcH3 with target promoter/enhancer regions was significantly decreased, which correlates with aberrant opsin transcription and photoreceptor dysfunction in these mice. Similar changes to the opsin chromatin were seen in Y79 retinoblastoma cells, where opsin genes are barely transcribed. These defects in Y79 cells can be reversed by expressing a recombinant Crx or applying histone deacetylase inhibitors. Altogether, these results suggest that one mechanism for Crx-mediated transcriptional activation is to recruit HATs to photoreceptor gene chromatin for histone acetylation, thereby inducing and maintaining appropriate chromatin configurations for transcription.