When mammals fast, glucose homeostasis is achieved by triggering expression of gluconeogenic genes in response to glucagon and glucocorticoids. The pathways act synergistically to induce gluconeogenesis (glucose synthesis), although the underlying mechanism has not been determined. Here we show that mice carrying a targeted disruption of the cyclic AMP (cAMP) response element binding (CREB) protein gene, or overexpressing a dominant-negative CREB inhibitor, exhibit fasting hypoglycaemia [corrected] and reduced expression of gluconeogenic enzymes. CREB was found to induce expression of the gluconeogenic programme through the nuclear receptor coactivator PGC-1, which is shown here to be a direct target for CREB regulation in vivo. Overexpression of PGC-1 in CREB-deficient mice restored glucose homeostasis and rescued expression of gluconeogenic genes. In transient assays, PGC-1 potentiated glucocorticoid induction of the gene for phosphoenolpyruvate carboxykinase (PEPCK), the rate-limiting enzyme in gluconeogenesis. PGC-1 promotes cooperativity between cyclic AMP and glucocorticoid signalling pathways during hepatic gluconeogenesis. Fasting hyperglycaemia is strongly correlated with type II diabetes, so our results suggest that the activation of PGC-1 by CREB in liver contributes importantly to the pathogenesis of this disease.