The PHO5 gene promoter is an important model for the study of gene regulation in the context of chromatin. Upon PHO5 activation the chromatin structure is reconfigured, but the mechanism of this transition remains unclear. Using templates reconstituted into chromatin with purified recombinant yeast core histones, we have investigated the mechanism of chromatin structure reconfiguration on the PHO5 promoter, a prerequisite for transcriptional activation. Footprinting analyses show that intrinsic properties of the promoter DNA are sufficient for translational nucleosome positioning, which approximates that seen in vivo. We have found that both Pho4p and Pho2p can bind their cognate sites on chromatin-assembled templates without the aid of histonemodifying or nucleosome-remodeling factors. However, nucleosome remodeling by these transcriptional activators requires an ATP-dependent activity in a yeast nuclear extract fraction. Finally, transcriptional activation on chromatin templates requires acetyl-CoA in addition to these other activities and cofactors. The addition of acetyl-CoA results in significant core histone acetylation. These findings indicate that transcriptional activation requires Pho4p, Pho2p, nucleosome remodeling, and nucleosome acetylation. Furthermore, we find that DNA binding, nucleosome remodeling, and transcriptional activation are separable steps, facilitating biochemical analysis of the PHO5 regulatory mechanism.Chromatin functions to compact and organize DNA in the nucleus of eukaryotic cells in a manner that allows regulated access to genes for transcription and DNA replication. The role of nucleosomes in transcriptional regulation has become a major area of study. From in vitro studies, it is clear that nucleosomes can repress transcription by RNA polymerase II (1-3). Further confirmation that nucleosomes play a prominent role in gene regulation came from studies showing that histone H4 depletion in yeast cells results in nucleosome loss and transcription derepression of several RNA polymerase II-transcribed genes (4, 5). Barring artificial loss, nucleosomes must be reconfigured prior to transcriptional activation of these genes. Recently, many yeast activities that remodel chromatin have been identified, including the SWI/SNF, INO80, ISW1, ISW2, and RSC complexes (reviewed in Ref. 6). All of these activities contain a DNA-or chromatin-dependent ATPase subunit required for remodeling. In addition, many transcriptional activators recruit histone acetyltransferase activities, which in yeast include the ADA, Spt-Ada-Gcn5 acetyltransferase (SAGA), NuA3, and NuA4 complexes (7,8).The chromatin structure of the yeast PHO5 promoter regulates RNA polymerase II transcription of the PHO5 gene, which encodes the major, secreted acid phosphatase in yeast (9). Under repressive conditions (adequate phosphate) the PHO5 promoter is bound in an array of positioned nucleosomes (10). Activation of PHO5 through phosphate starvation is accompanied by a loss or reconfiguration of four nucleosomes from the promot...