Activation of adult myoblasts called satellite cells during muscle degeneration is an important aspect of muscle regeneration. Satellite cells are believed to be the only myogenic stem cells in adult skeletal muscle and the source of regenerating muscle fibers. Upon activation, satellite cells proliferate, migrate to the site of degeneration, and become competent to fuse and differentiate. We show here that the transcription factor polyomavirus enhancer activator 3 (PEA3) is expressed in adult myoblasts in vitro when they are proliferative and during the early stages of differentiation. Overexpression of PEA3 accelerates differentiation, whereas blocking of PEA3 function delays myoblast fusion. PEA3 activates gene expression following binding to the ets motif most efficiently in conjunction with the transcription factor myocyte enhancer factor 2 (MEF2). In vivo, PEA3 is expressed in satellite cells only after muscle degeneration. Taken together, these results suggest that PEA3 is an important regulator of activated satellite cell function.