The Mediator complex forms the bridge between transcriptional activators and RNA polymerase II. Mediator subunit Med1/TRAP220 is a key component of Mediator originally found to associate with nuclear hormone receptors. Med1 deficiency causes lethality at embryonic day 11.5 because of defects in heart and placenta development. Here we show that Med1-deficient 10.5 days postcoitum embryos are anemic but have normal numbers of hematopoietic progenitor cells. Med1-deficient progenitor cells have a defect in forming erythroid burst-forming units (BFU-E) and colony-forming units (CFU-E), but not in forming myeloid colonies. At the molecular level, we demonstrate that Med1 interacts physically with the erythroid master regulator GATA-1. In transcription assays, Med1 deficiency leads to a defect in GATA-1-mediated transactivation. In chromatin immunoprecipitation experiments, we find Mediator components at GATA-1-occupied enhancer sites. Thus, we conclude that Mediator subunit Med1 acts as a pivotal coactivator for GATA-1 in erythroid development.