The glucocorticoid receptor (GR) is a member of the steroid receptor family of ligand-activated transcription factors. A long-standing question has focused on how GR and other receptors precisely control gene expression. One difficulty in addressing this is that GR function is influenced by multiple factors including ligand and coactivator levels, chromatin state, and allosteric coupling. Moreover, the receptor recognizes an array of DNA sequences that generate a range of transcriptional activities. Such complexity suggests that any single parameter-DNA binding affinity, for example-is unlikely to be a dominant contributor to function. Indeed, a number of studies have suggested that for GR and other receptors, binding affinity toward different DNA sequences is poorly correlated with transcriptional activity. As a step toward determining the factors most predictive of GR function, we rigorously examined the relationship between in vitro GR-DNA binding energetics and in vivo transcriptional activity. We first demonstrate that previous approaches for assessing affinity-function relationships are problematic due to issues of data transformation and linearization. Thus, the conclusion that binding energetics and transcriptional activity are poorly correlated is premature. Using more appropriate analyses, we find that energetics and activity are in fact highly correlated. Furthermore, this correlation can be quantitatively accounted for using simple binding models. Finally, we show that the strong relationship between energetics and transcriptional activity is recapitulated in multiple promoter contexts, cell lines, and chromatin environments. Thus, despite the complexity of GR function, DNA binding energetics are the primary determinant of sequence-specific transcriptional activity.