We utilized the mouse mammary tumor virus (MMTV) long terminal repeat (LTR) in vivo to understand how the interaction of the glucocorticoid receptor (GR) with a nucleosome-assembled promoter allows access of factors required for the transition from a repressed promoter to a derepressed, transcriptionally competent promoter. A mutation (C644G) in the ligand binding domain (LBD) of the mouse GR has provided information regarding the steps required in the derepression/activation process and in the functional significance of the two major transcriptional activation domains, AF1 and AF2. The mutant GR activates transcription from a transiently transfected promoter that has a disordered nucleosomal structure, though significantly less well than the wild-type GR. With an integrated, replicated promoter, which is assembled in an ordered nucleosomal array, the mutant GR does not activate transcription, and it fails to induce chromatin remodeling of the MMTV LTR promoter, as indicated by nuclease accessibility assays. Together, these findings support a two-step model for the transition of a nucleosome-assembled, repressed promoter to its transcriptionally active, derepressed form. In addition, we find that the C-terminal GR mutation is dominant over the transcription activation function of the N-terminal GR activation domain. These findings suggest that the primary activation function of the C-terminal activation domain is different from the function of the N-terminal activation domain and that it is required for derepression of the chromatin-repressed MMTV promoter.