AbstractActivation of oncogenic gene expression from long-range enhancers is initiated by the assembly of DNA-binding transcription factors (TF), leading to recruitment of co-activators such as CBP/p300 to modify the local genomic context and facilitate RNA-Polymerase 2 (Pol2) binding. Yet, most TF-to-coactivator recruitment relationships remain unmapped. Here, studying the oncogenic fusion TF PAX3-FOXO1 (P3F) from alveolar rhabdomyosarcoma (aRMS), we show that a single cysteine in the activation domain (AD) of P3F is important for a small alpha helical coil that recruits CBP/p300 to chromatin. P3F driven transcription requires both this single cysteine and CBP/p300. Mutants of the cysteine reduce aRMS cell proliferation and induce cellular differentiation. Furthermore, we discover a profound dependence on CBP/p300 for clustering of Pol2 loops that connect P3F to its target genes. In the absence of CBP/p300, Pol2 long range enhancer loops collapse, Pol2 accumulates in CpG islands and fails to exit the gene body. These results reveal a potential novel axis for therapeutic interference with P3F in aRMS and clarify the molecular relationship of P3F and CBP/p300 in sustaining active Pol2 clusters essential for oncogenic transcription.