In higher plants, although several genes involved in shoot apical meristem (SAM) formation and organ separation have been isolated, the molecular mechanisms by which they function are largely unknown. CUP-SHAPED COTYLEDON (CUC) 1 and CUC2 are examples of two such genes that encode the NAC domain proteins. This study investigated the molecular basis for their activities. Nuclear localization assays indicated that green fluorescent protein (GFP)-CUC proteins accumulate in the nucleus. Yeast one-hybrid and transient expression assays demonstrated that the C-terminal domain (CTD) of the CUC has transactivation activity. Domain-swapping experiments revealed that the functional specificity of the CUC for promoting adventitious shoot formation resides in the highly conserved NAC domain, not in the CTD in which motifs specific to the CUC subfamily are located. Taken together, these observations suggest that CUC proteins transactivate the target genes involved in SAM formation and organ separation through a specific interaction between the NAC domain and the promoter region of the target genes.