Nuclear receptors (NRs) comprise a family of ligand inducible transcription factors. To achieve transcriptional activation of target genes, DNA-bound NRs directly recruit general transcription factors (GTFs) to the preinitiation complex or bind intermediary factors, so-called coactivators. These coactivators often constitute subunits of larger multiprotein complexes that act at several functional levels, such as chromatin remodeling, enzymatic modification of histone tails, or modulation of the preinitiation complex via interactions with RNA polymerase II and GTFs. The binding of NR to coactivators is often mediated through one of its activation domains. Many NRs have at least two activation domains, the ligand-independent activation function (AF)-1, which resides in the N-terminal domain, and the ligand-dependent AF-2, which is localized in the C-terminal domain. In this review, we summarize and discuss current knowledge regarding the molecular mechanisms of AF-1- and AF-2-mediated gene activation, focusing on AF-1 and AF-2 conformation and coactivator binding.