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Sox2 (SRY-box 2) is a transcription factor with critical roles in maintaining embryonic and adult stem cell functions and in tumorigenesis. However, how Sox2 exerts its transcriptional function remains unclear. Here we used an in vitro protein-protein interaction assay to discover transcriptional regulators for embryonic stem cell core transcription factors (Oct4, Sox2, Klf4 and c-Myc) and identified members of the steroid receptor coactivators (SRCs) as Sox2-specific interacting proteins. The SRC family coactivators have broad roles in transcriptional regulation, but it is unknown whether they also serve as Sox2 coactivators. We demonstrated that these proteins facilitate Sox2 transcriptional activity and acts synergistically with p300. Furthermore, we uncovered an acetylation-enhanced interaction between Sox2 and SRC-2/3, but not SRC-1, demonstrating it is Sox2 acetylation that promotes the interaction. We identified putative Sox2 acetylation sites required for acetylation-enhanced interaction between Sox2 and SRC-3, and demonstrated that acetylation on these sites contributes to Sox2 transcriptional activity and recruitment of SRC-3. We showed that activation domains 1 (AD1) and 2 (AD2) of SRC-3 both display a preferential binding to acetylated Sox2. Finally, functional analyses in mouse embryonic stem (ES) cells demonstrated that knockdown of SRC-2/3 but not SRC-1 in mouse ES cells significantly down-regulates the transcriptional activities of various Sox2 target genes and impairs ES cell stemness. Taken together, we identify specific SRC family proteins as novel Sox2 coactivators and uncover the role of Sox2 acetylation in promoting coactivator recruitment and Sox2 transcriptional function.