Lithium salts are important drugs to treat bipolar disorder. Previous work showed that lithium by enforcing the interaction between the transcription factor CREB and its coactivator CRTC1 enhanced cAMP-stimulated CREB-dependent gene transcription. Both CREB and CRTC have been implicated in neuronal adaptation, which might underlie lithium's therapeutic action. In the present study the mechanisms of lithium action on cAMP-induced CREB-dependent gene transcription were further elucidated. Transient transfection assays revealed that all three CRTC isoforms conferred lithium responsiveness to CREB whereas their intrinsic transcriptional activities remained unchanged by lithium, suggesting a conformational change of CREB or CRTC by lithium. In in vitro protein-protein interaction assays lithium enhanced the interaction between CREB and both coactivators CRTC and CBP. Furthermore, lithium enforced the oligomerization of CRTC, a prerequisite for CREB interaction. For further evaluation it was investigated whether lithium competes with magnesium, which coordinates the conformation of the CREB basic region leucine zipper (bZip). Mutational analysis of the magnesium coordinating lysine-290 within the bZip, in vitro and intracellular interaction assays and luciferase reporter-gene assays revealed that the effect of lithium on the CREB-CRTC interaction or on the transcriptional activity, respectively, was not affected by the mutation, thus excluding a magnesium-lithium competition. However, the CREB-CRTC interaction was strongly increased in lysine-290-mutants thereby extending the CRTC-CREB interaction domain. Taken together the results exclude a competition between lithium and magnesium at the bZip, but suggest that lithium by enforcing the CRTC-oligomer formation and the interaction of CREB-CBP-CRTC enhances cAMP-induced CREB-dependent gene transcription.