The first step in transcriptional activation of protein-coding genes involves the assembly on the promoter of a large PIC (pre-initiation complex) comprising RNA polymerase II and a suite of general transcription factors. Transcription is greatly enhanced by the action of promoter-specific activator proteins (activators) that function, at least in part, by increasing PIC formation. Activator-mediated stimulation of PIC assembly is thought to result from a direct interaction between the activator and one or more components of the transcription machinery, termed the 'target'. The unambiguous identification of direct, physiologically relevant in vivo targets of activators has been a considerable challenge in the transcription field. The major obstacle has been the lack appropriate experimental methods to measure direct interactions with activators in vivo. The development of spectral variants of green fluorescent protein has made it possible to perform FRET (fluorescence resonance energy transfer) analysis in living cells, thereby allowing the detection of direct protein-protein interactions in vivo. Here we discuss how FRET can be used to identify activator targets and to dissect in vivo mechanisms of transcriptional activation.