The related kinases ATM (ataxia-telangiectasia mutated) and ATR (ataxia-telangiectasia and Rad3-related) phosphorylate a limited number of downstream protein targets in response to DNA damage. Here we report a new pathway in which ATM kinase signals the DNA damage response by targeting the transcriptional cofactor Strap. ATM phosphorylates Strap at a serine residue, stabilizing nuclear Strap and facilitating formation of a stress-responsive co-activator complex. Strap activity enhances p53 acetylation, and augments the response to DNA damage. Strap remains localized in the cytoplasm in cells derived from ataxia telangiectasia individuals with defective ATM, as well as in cells expressing a Strap mutant that cannot be phosphorylated by ATM. Targeting Strap to the nucleus reinstates protein stabilization and activates the DNA damage response. These results indicate that the nuclear accumulation of Strap is a critical regulator in the damage response, and argue that this function can be assigned to ATM through the DNA damage-dependent phosphorylation of Strap.