Genetic studies have demonstrated that MyoD and Myf5 establish the skeletal muscle lineage, whereas myogenin mediates terminal differentiation, yet the molecular basis for this distinction is not understood. We show that MyoD can remodel chromatin at binding sites in muscle gene enhancers and activate transcription at previously silent loci. TGF-beta, basic-FGF, and sodium butyrate blocked MyoD-mediated chromatin reorganization and the initiation of transcription. In contrast, TGF-beta and sodium butyrate did not block transcription when added after chromatin remodeling had occurred. MyoD and Myf-5 were 10-fold more efficient than myogenin at activating genes in regions of transcriptionally silent chromatin. Deletion mutagenesis of the MyoD protein demonstrated that the ability to activate endogenous genes depended on two regions: a region rich in cysteine and histidine residues between the acidic activation domain and the bHLH domain, and a second region in the carboxyl terminus of the protein. Neither region has been shown previously to regulate gene transcription and both have domains that are conserved in the Myf5 protein. Our results establish a mechanism for chromatin modeling in the skeletal muscle lineage and define domains of MyoD, independent of the activation domain, that participate in chromatin reorganization.