The assembly of transcriptional regulatory DNA sequences into chromatin plays a fundamental role in modulating gene expression(1,2). The promoter of the mouse mammary-tumour virus (MMTV) is packaged into a regular array of nucleosomes when it becomes stably integrated into mammalian chromosomes, and has been used to investigate the relationship between chromatin architecture and transcriptional activation by the hormone-bound glucocorticoid and progesterone receptors(3,4). In mammalian cells that express both of these receptors, the progesterone receptor activates transcription from transiently transfected MMTV DNA(5,6) but not from organized chromatin templates(7). Moreover, the activated progesterone receptor inhibits the chromatin remodelling and consequent transcriptional stimulation that is mediated by the glucocorticoid receptor. Here we investigate the mechanism of this inhibition by characterizing the interaction of the glucocorticoid receptor with transcriptional co-activator and chromatin remodelling protein complexes(2,8). We show that when this receptor is prevented from interacting with the hBRG1/BAF chromatin remodelling complex, it can activate transcription from transiently transfected DNA but not from organized chromatin templates. Our results indicate that it may be possible to separate the transcriptional activation and chromatin remodelling activities of proteins that interact with hormone receptors.