We show that PARP-1 is indispensable to retinoic acid receptor (RAR)-mediated transcription from the RARbeta2 promoter in a highly purified, reconstituted transcription system and that RA-inducible expression of all RARbeta isoforms is abrogated in PARP-1(-/-) cells in vivo. Importantly, PARP-1 activity was independent of its catalytic domain. PARP-1 directly interacts with RAR and Mediator. Chromatin immunoprecipitation experiments confirmed the presence of PARP-1 and Mediator on RAR-responsive promoters in vivo. Importantly, Mediator was inactive (Cdk8+) under basal conditions but was activated (Cdk8-) upon induction. However, in PARP-1(-/-) cells, Mediator was retained in its inactive state (Cdk8+) upon induction consistent with the absence of gene expression. PARP-1 became dispensable for ligand-dependent transcription in a chromatin reconstituted transcription assay when Mediator was devoid of the Cdk8 module (CRSP). PARP-1 appears to function as a specificity factor regulating the RA-induced switch of Mediator from the inactive (Cdk8+) to the active (Cdk8-) state in RAR-dependent transcription.