Histone H1 promotes the generation of a condensed, transcriptionally inactive, higher-order chromatin structure. Consequently, historic H1 activity must be antagonized in order to convert chromatin to a transcriptionally competent, more extended structure. Using simian virus 40 minichromosomes as a model system, we now demonstrate that the nonhistoric chromosomal protein HMG-14, which is known to preferentially associate with active chromatin, completely alleviates historic H1-mediated inhibition of transcription by RNA polymerase II. HMG-14 also partially disrupts histone H1-dependent compaction of chromatin. Both the transcriptional enhancement and chromatin-unfolding activities of HMG-14 are mediated through its acidic, C-terminal region. Strikingly, transcriptional and structural activities of HMG-14 are maintained upon replacement of the C-terminal fragment by acidic regions from either GAL4 or HMG-2. These data support the model that the acidic C terminus of HMG-14 is involved in unfolding higher-order chromatin structure to facilitate transcriptional activation of mammalian genes.