We have studied the intracellular compartmentalization in yeast of Escherichia coli beta-galactosidase bearing heterologous amino acid sequences at its amino terminus. Chimeras containing as few as 74 NH2-terminal amino acids of GAL4, a yeast positive regulatory protein, at the amino terminus accumulate in the cell nucleus. This and other results are consistent with the proposal that the GAL4 gene product mediates positive control by binding to DNA and that the information for nuclear localization resides in its amino terminus. The amino acid sequence of the GAL4 amino terminus does not agree with the previously proposed consensus sequences responsible for nuclear localization. The beta-galactosidase activity in cells bearing the non-nuclear chimeric proteins is 10-fold greater than in cells bearing chimeric proteins that specifically concentrate in the nucleus.