Human X box binding protein 1 (XBP-1) is a transcription factor essential for hepatocyte growth, the differentiation of plasma cells, and the unfolded protein response. Recently, we have demonstrated that two forms of XBP-1, XBP-1S, and XBP-1U, enhance estrogen receptor alpha(ERalpha)-dependent transcriptional activity in a ligand-independent manner. However, how XBP-1S and XBP-1U regulate ERalpha transcriptional activity remains unknown. Here, we report that XBP-1S and XBP-1U induce large-scale chromatin unfolding by targeting the XBP-1 proteins to an amplified, lac opera I or-containing chromosome region in mammalian cells. This unfolding activity maps to the transactivation domains of XBP-1S and XBP-1U. Wild-type XBP-1S and XBP-1U, but not the mutants that completely abolished the ERalpha transcriptional activation, increased the chromatin unfolding activity of ERalpha. These data identify a novel function of XBP-1 and suggest that regulation of large-scale chromatin unfolding by XBP-1 may be responsible for the enhancement of ERalpha transcriptional activity. (C) 2004 Elsevier Inc. All rights reserved.