===Update October, 30, 2019===
Since we have new components such as ViewModel and LiveData, we can have a different/easier way to update Activity Title from Fragment by using ViewModel and Live Data
Activity
class MainActivity : AppCompatActivity() {
private lateinit var viewModel: MainViewModel
override fun onCreate(savedInstanceState: Bundle?) {
    super.onCreate(savedInstanceState)
    setContentView(R.layout.main_activity)
    if (savedInstanceState == null) {
        supportFragmentManager.beginTransaction()
            .replace(R.id.container, MainFragment.newInstance())
            .commitNow()
    }
    viewModel = ViewModelProviders.of(this).get(MainViewModel::class.java)
    viewModel.title.observe(this, Observer {
        supportActionBar?.title = it
    })
} }
MainFragment
class MainFragment : Fragment() {
companion object {
    fun newInstance() = MainFragment()
}
private lateinit var viewModel: MainViewModel
override fun onCreateView(inflater: LayoutInflater, container: ViewGroup?,
                          savedInstanceState: Bundle?): View {
    return inflater.inflate(R.layout.main_fragment, container, false)
}
override fun onActivityCreated(savedInstanceState: Bundle?) {
    super.onActivityCreated(savedInstanceState)
    activity?.run {
        viewModel = ViewModelProviders.of(this).get(MainViewModel::class.java)
    } ?: throw Throwable("invalid activity")
    viewModel.updateActionBarTitle("Custom Title From Fragment")
} }
And MainModelView:
class MainViewModel : ViewModel() {
private val _title = MutableLiveData<String>()
val title: LiveData<String>
get() = _title
fun updateActionBarTitle(title: String) = _title.postValue(title) }
And then you can update the Activity title from Fragment using viewModel.updateActionBarTitle("Custom Title From Fragment")
===Update April, 10, 2015===
You should use listener to update your action bar title
Fragment:
public class UpdateActionBarTitleFragment extends Fragment {
    private OnFragmentInteractionListener mListener;
    public UpdateActionBarTitleFragment() {
    }
    @Override
    public void onCreate(Bundle savedInstanceState) {
        super.onCreate(savedInstanceState);
        if (getArguments() != null) {
        }
    }
    @Override
    public View onCreateView(LayoutInflater inflater, ViewGroup container,
                             Bundle savedInstanceState) {
        if (mListener != null) {
            mListener.onFragmentInteraction("Custom Title");
        }
        return inflater.inflate(R.layout.fragment_update_action_bar_title2, container, false);
    }
    @Override
    public void onAttach(Activity activity) {
        super.onAttach(activity);
        try {
            mListener = (OnFragmentInteractionListener) activity;
        } catch (ClassCastException e) {
            throw new ClassCastException(activity.toString()
                    + " must implement OnFragmentInteractionListener");
        }
    }
    @Override
    public void onDetach() {
        super.onDetach();
        mListener = null;
    }
    public interface OnFragmentInteractionListener {
        public void onFragmentInteraction(String title);
    }
}
And Activity:
public class UpdateActionBarTitleActivity extends ActionBarActivity implements UpdateActionBarTitleFragment.OnFragmentInteractionListener {
    @Override
    protected void onCreate(Bundle savedInstanceState) {
        super.onCreate(savedInstanceState);
        setContentView(R.layout.activity_update_action_bar_title);
    }
    @Override
    public void onFragmentInteraction(String title) {
        getSupportActionBar().setTitle(title);
    }
}
Read more here: https://developer.android.com/training/basics/fragments/communicating.html