Multiple relationships between ubiquitin-proteasome mediated protein turnover and transcriptional activation have been well documented, but the underlying mechanisms are still poorly understood. One way to induce degradation is via ubiquitination of the N-terminal α-amino group of proteins. The major histocompatibility complex (MHC) class II transactivator CIITA is the master regulator of MHC class II gene expression and we found earlier that CIITA is a short-lived protein. Using stable and transient transfections of different CIITA constructs into HEK-293 and HeLa cell lines, we show here that the extreme N-terminal end of CIITA isoform III induces both rapid degradation and transactivation. It is essential that this sequence resides at the N-terminal end of the protein since blocking of the N-terminal end with an epitope-tag stabilizes the protein and reduces transactivation potential. The first ten amino acids of CIITA isoform III act as a portable degron and transactivation sequence when transferred as N-terminal extension to truncated CIITA constructs and are also able to destabilize a heterologous protein. The same is observed with the N-terminal ends of several known N-terminal ubiquitination substrates, such as Id2, Cdt1 and MyoD. Arginine and proline residues within the N-terminal ends contribute to rapid turnover. The N-terminal end of CIITA isoform III is responsible for efficient in vivo recruitment to the HLA-DRA promoter and increased interaction with components of the transcription machinery, such as TBP, p300, p400/Domino, the 19S ATPase S8, and the MHC-II promoter binding complex RFX. These experiments reveal a novel function of free N-terminal ends of proteins in degradation-dependent transcriptional activation.