Immunoglobulin rearrangement from variable heavy chain (VH) to diversity (D)-joining heavy chain (JH), which occurs exclusively in B lineage cells, is impaired in mice deficient for the B lineage-specific transcription factor Pax5. Conversely, ectopic Pax5 expression in thymocytes promotes the rearrangement of DH -proximal VH7183 genes. In exploring the mechanism for Pax5 regulation of VH-to-DJH recombination, we have identified multiple Pax5 binding sites in the coding regions of human and mouse VH gene segments. Pax5 bound to those sites in vitro and occupied VH genes in early human and mouse B lineage cells. Moreover, Pax5 interacted with the recombination-activating gene 1 (RAG1)-RAG2 complex to enhance RAG-mediated VH recombination signal sequence cleavage and recombination of a VH gene substrate. These findings indicate a direct activating function for Pax5 in RAG-mediated immunoglobulin VH-to-DJH recombination. © 2006 Nature Publishing Group.