Transcriptional termination of the GAL10 gene in Saccharomyces cerevisiae depends on the efficiency of polyadenylation. Either cis mutations in the poly(A) signal or trans mutations of mRNA 3 end cleavage factors result in GAL10 read-through transcripts into the adjacent GAL7 gene and inactivation (occlusion) of the GAL7 promoter. Herein, we present a molecular explanation of this transcriptional interference phenomenon. In vivo footprinting data reveal that GAL7 promoter occlusion is associated with the displacement of Gal4p transcription factors from the promoter. Interestingly, overexpression of Gal4p restores promoter occupancy, activates GAL7 expression, and rescues growth on the otherwise toxic galactose substrate. Our data therefore demonstrate a precise balance between transcriptional interference and initiation.T ranscriptional termination of RNA polymerase II (Pol II) is linked to mRNA 3Ј processing, which is a two-step reaction consisting of endonucleolytic cleavage of the RNA precursor and subsequent polyadenylation (1). Mutation of poly(A) signals results in increased transcription beyond the poly(A) site of a gene (1) and recently has been shown to depend on the activity of 3Ј end processing factors (2). Some RNA processing factors are associated with elongating Pol II, indicating a tight link between transcription and RNA processing (3, 4). In contrast to Pol I (5) and Pol III, termination of Pol II occurs at variable, ill-defined positions downstream of the poly(A) site of a gene (1). These findings suggest that transcriptional termination can be a random process.In some instances, however, termination of transcription must occur efficiently, because enhanced transcriptional read-through can result in inhibition of an adjacent, downstream promoter and also perturbs origin of replication and centromere function (6-9). Closely spaced genes are particularly prone to promoter occlusion, especially when they are expressed at the same time, as in the case of the GAL10 and GAL7 genes of Saccharomyces cerevisiae. These two genes are separated by 600 bp and are activated simultaneously to high levels by galactose (gal). We have shown previously that deletion of the GAL10 poly(A) signal leads to enhanced GAL10 read-through transcription and formation of GAL10-7 bicistronic transcripts, which in turn results in inhibition of the downstream GAL7 promoter (ref. 10; Fig. 1A). Gal7p (gal uridyl transferase) catalyzes conversion of the metabolic intermediate gal 1-phosphate, which is otherwise toxic. Inhibition of Gal7p expression by transcriptional readthrough into the GAL7 promoter renders cells gal sensitive and results in a Gal Ϫ phenotype, emphasizing the importance of termination in this system.Transcription of the GAL genes depends on the transcription factor Gal4p, which binds to 17-bp sequence elements within the promoter regions (11, 12). The binding affinity of Gal4p for these sites depends on both the sequence and spacing between the critical outer nucleotide triplets (CGG. . . GGC), which are conta...