CIC-DUX4-rearranged sarcoma (CDS) is a rare and aggressive soft tissue tumor that occurs most frequently in young adults. The key oncogenic driver of this disease is the expression of the CIC-DUX4 fusion protein as a result of chromosomal rearrangements. CIC-DUX4 displays chromatin binding properties, and is therefore believed to function as an aberrant transcription factor. However, the chromatin remodeling events induced by CIC-DUX4 are not well understood, limiting our ability to identify new mechanism-based therapeutic strategies for these patients. Here, we generated a genome-wide profile of CIC-DUX4 DNA occupancy and associated chromatin states in human CDS cell models and primary tumors. Combining chromatin profiling, proximity ligation assays, as well as genetic and pharmacological perturbations, we show that CIC-DUX4 operates as a potent transcriptional activator at its binding sites. This property is in contrast with the repressive function of the wild-type CIC protein, and is mainly mediated through the direct interaction of CIC-DUX4 with the acetyltransferase p300. In keeping with this, we show p300 to be essential for CDS tumor cell proliferation; additionally, we find its pharmacological inhibition to significantly impact tumor growth in vitro and in vivo. Taken together, our study elucidates the mechanisms underpinning CIC-DUX4-mediated transcriptional regulation.