Y-box-binding protein 1 (YB-1) is a multifunctional positively charged protein that interacts with DNA or RNA and poly(ADP-ribose) (PAR). YB-1 is poly(ADP-ribosyl)ated and stimulates poly(ADP-ribose) polymerase 1 (PARP1) activity. Here, we studied the mechanism of YB-1-dependent PAR synthesis by PARP1 in vitro using biochemical and atomic force microscopy assays. PAR synthesis activity of PARP1 is known to be facilitated by co-factors such as Mg2+. However, in contrast to an Mg2+-dependent reaction, the activation of PARP1 by YB-1 is accompanied by overall up-regulation of protein PARylation and shortening of the PAR polymer. Therefore, YB-1 and cation co-factors stimulated PAR synthesis in divergent ways. PARP1 autoPARylation in the presence of YB-1 as well as trans-PARylation of YB-1 are greatly affected by the type of damaged DNA, suggesting that PARP1 activation depends on the formation of a PARP1–YB-1–DNA ternary complex. An unstructured C-terminal part of YB-1 involved in an interaction with PAR behaves similarly to full-length YB-1, indicating that both DNA and PAR binding are involved in the stimulation of PARP1 activity by YB-1. Thus, YB-1 is likely linked to the regulation of PARylation events in cells via an interaction with PAR and damaged DNA.