A number of hormones and growth factors stimulate gene expression by promoting the phosphorylation of CREB (P‐CREB), thereby enhancing its association with the histone acetylase paralogs p300 and CBP (CBP/p300). Relative to cAMP, stress signals trigger comparable amounts of CREB phosphorylation, but have minimal effects on CRE‐dependent transcription. Here, we show that the latent cytoplasmic coactivator TORC2 mediates target gene activation in response to cAMP signaling by associating with CBP/p300 and increasing its recruitment to a subset of CREB target genes. TORC2 is not activated in response to stress signals, however; and in its absence, P‐CREB is unable to stimulate CRE‐dependent transcription, due to a block in CBP recruitment. The effect of TORC2 on CBP/p300 promoter occupancy appears pivotal because a gain of function mutant CREB polypeptide with increased affinity for CBP restored CRE‐mediated transcription in cells exposed to stress signals. Taken together, these results indicate that TORC2 is one of the long sought after cofactors that mediates the differential effects of cAMP and stress pathways on CREB target gene expression.