GATA-1 and its cofactor FOG-1 are required for the differentiation of erythrocytes and megakaryocytes. In contrast, mast cell development requires GATA-1 and the absence of FOG-1. Through genome-wide comparison of the chromatin occupancy of GATA-1 and a naturally occurring mutant that cannot bind FOG-1 (GATA-1^V205G), we reveal that FOG-1 intricately regulates the chromatin occupancy of GATA-1. We identified GATA1-selective and GATA-1^V205G-selective binding sites and show that GATA-1, in the absence of FOG-1, occupies GATA-1^V205G-selective sites, but not GATA1-selective sites. By integrating ChIP-seq and gene expression data, we discovered that GATA-1^V205G binds and activates mast cell-specific genes via GATA-1^V205G-selective sites. We further show that exogenous expression of FOG-1 in mast cells leads to displacement of GATA-1 from mast cell-specific genes and causes their downregulation. Together these findings establish a mechanism of gene regulation whereby a non-DNA binding cofactor directly modulates the occupancy of a transcription factor to control lineage specification.