The methylotrophic yeasts are commonly used as hosts for heterologous gene expression. In this study, we describe a novel gene, TRM1, in Candida boidinii, responsible for the transcriptional activation of several methanol-inducible promoters. The encoded protein, Trm1p, is a Zn(II) 2 Cys 6 -type zinc cluster protein. Deletion of TRM1 completely inhibits growth on methanol but causes no growth defect on glucose or other nonfermentative carbon sources, glycerol, ethanol, or oleate. Trm1p is responsible for transcriptional activation of five methanol-inducible promoters tested, but not for peroxisome assembly or peroxisomal protein transport. Expression of the TRM1 gene was constitutive, and Trm1p localizes to the nuclei regardless of the carbon source. Two cis-acting methanol response elements (MREs), MRE1 and MRE2 are present in the promoter of the dihydroxyacetone synthase gene. Trm1p is shown to be required for MRE1-dependent methanol-inducible gene expression. Chromatin immunoprecipitation assays reveal that Trm1p binds to five methanol-inducible promoters upon methanol induction but does not bind in glucose-grown cells. Thus, the TRM1 gene encodes a master transcriptional regulator responsible for methanol-specific gene activation in the methylotrophic yeasts.Methylotrophic yeasts, which can utilize methanol as the sole carbon and energy source, have been used as the hosts for production of a wide variety of heterologous proteins and also as a model organism for studies of peroxisome biogenesis and degradation (4,14,19). To date, heterologous expression systems have been established in Candida boidinii, Hansenula polymorpha (Pichia angusta), Pichia methanolica, and Pichia pastoris (2,4,15,22). With these expression systems, a large number of useful proteins have been produced, e.g., enzymes, antibodies, cytokines, plasma proteins, and hormones (4). The unique feature of these systems is that heterologous gene expression can be driven by methanol-inducible promoters, allowing production of the target protein to be tightly regulated; this is particularly important when the desired protein is toxic to the host cell. The molecular mechanism of methanol-inducible gene expression, however, has yet to be elucidated.When methylotrophic yeasts grow on methanol as the sole carbon source, peroxisomes massively proliferate and can occupy up to 80% of the intracellular volume. Methanol-induced peroxisomes contain methanol-metabolizing enzymes, alcohol oxidase (AOD), dihydroxyacetone synthase (DAS), and catalase. AOD catalyzes the oxidation of methanol to form formaldehyde and hydrogen peroxide. Formaldehyde is situated at the branching point of the assimilation and dissimilation pathways. DAS catalyzes the first reaction of the assimilation pathway by fixing formaldehyde with xylulose-5-phosphate. Alternatively, formaldehyde can be oxidized to carbon dioxide by the glutathione-dependent formaldehyde oxidation pathway, catalyzed by formaldehyde dehydrogenase, S-formylglutathione hydrolase, and formate dehydrogenase (FDH) i...