Activation of AMP-activated kinase (AMPK) in skeletal muscle increases glucose uptake, fatty acid oxidation, and mitochondrial biogenesis by increasing gene expression in these pathways. However, the transcriptional components that are directly targeted by AMPK are still elusive. The peroxisome-proliferator-activated receptor gamma coactivator 1alpha (PGC-1alpha) has emerged as a master regulator of mitochondrial biogenesis; furthermore, it has been shown that PGC-1alpha gene expression is induced by exercise and by chemical activation of AMPK in skeletal muscle. Using primary muscle cells and mice deficient in PGC-1alpha, we found that the effects of AMPK on gene expression of glucose transporter 4, mitochondrial genes, and PGC-1alpha itself are almost entirely dependent on the function of PGC-1alpha protein. Furthermore, AMPK phosphorylates PGC-1alpha directly both in vitro and in cells. These direct phosphorylations of the PGC-1alpha protein at threonine-177 and serine-538 are required for the PGC-1alpha-dependent induction of the PGC-1alpha promoter. These data indicate that AMPK phosphorylation of PGC-1alpha initiates many of the important gene regulatory functions of AMPK in skeletal muscle.