The P/CAF protein has intrinsic histone acetyltransferase (HAT) activity and is capable of binding the transcriptional co-activator CBP. Here we show that P/CAF can regulate transcription and that this function is independent of its binding to CBP. The HAT domain of P/CAF has transcriptional activation potential in yeast. In mammalian cells P/CAF can stimulate transcription of the RSV promoter, using the activity of its HAT domain. We show that the adenovirus protein E1A targets P/CAF and sequesters its transcriptional activity. Binding of E1A to P/CAF is direct, independent of CBP and requires residues within E1A conserved region 1. We find that the P/CAF binding residues in E1A are within a motif shown to be essential for efficient disruption of myogenesis by E1A. The fact that E1A can directly bind and regulate the activity of P/CAF, independently of its regulation of CBP, highlights an important role for P/CAF in the process of cell differentiation.