The Spt-Ada-Gcn5-acetyltransferase (SAGA) complex was discovered from Saccharomyces cerevisiae and has been well characterized as an important transcriptional coactivator that interacts both with sequence-specific transcription factors and the TATA-binding protein TBP. SAGA contains a histone acetyltransferase and a ubiquitin protease. In metazoans, SAGA is essential for development, yet little is known about the function of SAGA in differentiating tissue. We analyzed the composition, interacting proteins, and genomic distribution of SAGA in muscle and neuronal tissue of late stage Drosophila melanogaster embryos. The subunit composition of SAGA was the same in each tissue; however, SAGA was associated with considerably more transcription factors in muscle compared with neurons. Consistent with this finding, SAGA was found to occupy more genes specifically in muscle than in neurons. Strikingly, SAGA occupancy was not limited to enhancers and promoters but primarily colocalized with RNA polymerase II within transcribed sequences. SAGA binding peaks at the site of RNA polymerase pausing at the 5' end of transcribed sequences. In addition, many tissue-specific SAGA-bound genes required its ubiquitin protease activity for full expression. These data indicate that in metazoans SAGA plays a prominent post-transcription initiation role in tissue-specific gene expression.