The transcription initiation factor TFIID, consisting of the TATA box-binding protein (TBP) and many TBP-associated factors (TAFs), plays a central role in both basal and activated transcription. An intriguing finding is that the 80-residue N-terminal region of Drosophila TAF II 230 [dTAF II 230-(2-81)] can bind directly to TBP and inhibit its function. Here, studies with mutated forms of TBP demonstrate that dTAF II 230-(2-81) binds to the concave surface of TBP, which is important for TATA box binding. Previously, it was reported that a point mutation (L114K) on this concave surface destroys the ability of TBP to bind VP16 and to mediate VP16-dependent activation in vitro, but has no effect on basal transcription. Importantly, the same TBP mutation eliminates TBP binding to dTAF II 230-(2-81). Consistent with these effects of the L114K mutation, dTAF II 230-(2-81) and the VP16 activation domain compete for binding to wild-type TBP. These results indicate that transcriptional regulation may involve, in part, competitive interactions between transcriptional activators and TAFs on the TBP surface.Transcriptional initiation of eukaryotic protein-encoding genes requires at least six transcription initiation factors (TFIIA, TFIIB, TFIID, TFIIE, TFIIF, and TFIIH) in addition to RNA polymerase II, and biochemical analyses with separated factors have defined a sequence of steps which lead to the in vitro formation of a preinitiation complex on a TATA box-containing promoter (reviewed in ref. 1). The first step is TFIID binding, a process that may be facilitated by TFIIA. The subsequent binding of TFIIB, through specific TATA box-binding protein (TBP) and DNA contacts, creates a platform that is in turn recognized by a complex consisting of RNA polymerase II and TFIIF. Further incorporation of TFIIE and TFIIH completes preinitiation complex formation. More recent studies have revealed complexes of RNA polymerase II, general initiation factors, and cofactors that may enter the preinitiation complex as a preassembled unit (reviewed in refs. 2 and 3). Because variable compositions of general factors have been reported for these holoenzyme complexes, depending upon both the species and the preparation methods, the assembly pathway most relevant to the in vivo situation remains unclear. However, TFIID binding to the promoter could be a critical checkpoint for promoter activation in several different pathways, consistent with studies showing both qualitative and quantitative effects of activators on TFIID binding (4 -11).TFIID itself is a multimeric protein complex consisting of TBP and TBP-associated factors (TAFs) whose sizes range from M r Ϸ 10,000 to Ͼ200,000 (for a review, see ref. TAFs also play an important role in promoter selectivity in basal transcription. Our earlier experiments with partially purified TFIID demonstrated that TFIID binds stably to a specific core promoter in a manner that depends on both the TATA and the downstream initiator-like elements (15). Deletion of the downstream element significant...