CREB-binding protein (CBP) and CBP-associated factor (P/CAF) are coactivators possessing an intrinsic histone acetyltransferase (HAT) activity. They are positioned at promoter regions via association with sequence-specific DNA-binding factors and stimulate transcription in a gene-specific manner. The current view suggests that coactivator function depends mainly on the strength and specificity of transcription factor–coactivator interactions. Here we show that two dominant-negative mutants of hepatocyte nuclear factor-1α (HNF-1α), P447L and P519L, occurring in maturity onset diabetes of the young (MODY3) patients, exhibit paradoxically stronger interactions than the wild-type protein with either CBP or P/CAF. However, CBP and P/CAF recruited by these mutants lack HAT activity. In contrast, wild-type HNF-1α and other transcription factors, such as Sp1 or HNF-4, stimulated the HAT activity of CBP. The results suggest a more dynamic role for DNA-binding proteins in the transcription process than was considered previously. They are not only required for the recruitment of coactivators to the promoter but they may also modulate their enzymatic activity.