The ACE1 gene of the yeast Saccharomyces cerevisiae is required for copper-inducible transcription of the metallothionein gene (CUP1). The sequence of the cloned ACE1 gene predicted an open reading frame for translation of a 225-amino-acid polypeptide. This polypeptide was characterized by an amino-terminal half rich in cysteine residues and positively charged amino acids. The arrangement of many of the 12 cysteines in the configuration Cys-X-Cys or Cys-X-X-Cys suggested that the ACE1 protein may bind metal ions. The carboxyl-terminal half of the ACE1 protein was devoid of cysteines but was highly acidic in nature. The ability of a bifunctional ACE1-beta-galactosidase fusion protein to accumulate in yeast cell nuclei was consistent with the possibility that ACE1 plays a direct role in the regulation of copper-inducible transcription of the yeast metallothionein gene.