Protein phosphorylation represents one of the major mechanisms for transcription factor activation. Here we demonstrate a molecular mechanism by which phosphorylation by mitogen-activated protein (MAP) kinases leads to changes in transcription factor activity. MAP kinases stimulate DNA binding and transcriptional activation mediated by the mammalian ETS-domain transcription factor Elk-1. Phosphorylation of the C-terminal transcriptional activation domain induces a conformational change in Elk-1, which accompanies the stimulation of DNA binding. C-terminal phosphorylation is coupled to activation of DNA binding by the N-terminal DNA-binding domain via an additional intermediary domain. Activation of DNA binding is mediated by an allosteric mechanism involving the key phosphoacceptor residues. Together, these results provide a molecular model for how phosphorylation induces changes in Elk-1 activity.