Saccharomyces cerevisiae responds to galactose as the sole source of carbon by activating the GAL genes encoding the enzymes of the Leloir pathway. Here, we show in vitro that the switch from repressed to activated gene expression involves the interplay of three proteins [an activator (Gal4p), a repressor (Gal80p) and an inducer (Gal3p)] and two small molecules (galactose and ATP). We also show that the galactose- and ATP-dependent interaction between Gal3p and Gal80p occurs without disruption of the Gal80p-Gal4p interaction. Thus, Gal3p-mediated activation of transcription occurs via the formation of a tripartite protein complex.