Peroxisome proliferator-activated receptor gamma coactivator-1alpha (PGC-1alpha) has been shown to play an important role in energy metabolism by coordinating transcriptional programs involved in mitochondrial biogenesis, adaptive thermogenesis, gluconeogenesis, and fatty acid oxidation. PGC-1alpha also plays a crucial role in cholesterol metabolism by serving as a coactivator of the liver X receptor-alpha and inducing the expression of cholesterol 7-alpha-hydroxylase. Here, we demonstrate that PGC-1alpha also functions as an effective coactivator of farnesoid X receptor (FXR), the bile acid receptor. Transient cotransfection assays demonstrate that PGC-1alpha enhances ligand-mediated FXR transcription when either full-length FXR or Gal4 DNA binding domain-FXR-ligand binding domain chimeras were analyzed. Mammalian two-hybrid analyses, glutathione S-transferase affinity chromatography and biochemical coactivator recruitment assays demonstrate ligand-dependent interaction between the two proteins both in vivo and in vitro. PGC-1alpha-mediated coactivation of FXR was highly ligand-dependent and absolutely required an intact activation function-2 (AF-2) domain of FXR and the LXXLL motif in PGC-1alpha. The integrity of the charge clamp was required, further illustrating the role of the ligand binding domain of FXR in PGC-1alpha recognition. Together, these results indicate that PGC-1alpha functions as a potent coactivator for FXR and further implicates its role in the regulation of genes that are involved in bile acid and lipid metabolism.