DREAM (downstream regulatory element antagonist modulator) is a transcriptional repressor, which binds DREs (downstream response elements) in a Ca2+-regulated manner. The DREs consist of core GTCA motifs, very similar to binding motifs for non-steroid nuclear receptors. In this work, we find that DREAM stimulates basal and ligand-dependent activation of promoters containing vitamin D and retinoic acid response elements (VDREs and RAREs), consisting of direct repeats of the sequence AGT/GTCA spaced by 3 or 5 nt, respectively. Stimulation occurs when the element is located upstream, but not downstream, the transcription initiation site. Activation requires both Ca2+ binding to the EF-hands and the leucine-charged domains (LCDs), analogous to those responsible for the interaction of the nuclear receptors with coregulators. Further more, DREAM can bind both 'in vitro' and in chromatin immunoprecipitation assays to these elements. Importantly, 'in vivo' binding is only observed in vitamin D- or RA-treated cells. These results show that DREAM can function as an activator of transcription on certain promoters and demonstrate a novel role for DREAM acting as a potential modulator of genes containing binding sites for nuclear receptors.