The INO4 gene encodes a protein required for derepression of a number of structural genes encoding enzymes involved in phospholipid biosynthesis in the yeast Saccharomyces cerevisiae. Ino4p shows structural similarity to the basic helix-loop-helix (bHLH) family of regulatory proteins (Hoshizaki, D. K., Hill, J. E., and Henry, S. A. (1990) J. Biol Chem. 265, 4736-4745). In this report we demonstrate that Ino4p translated in vitro forms a complex with Ino2p, another positive regulator of phospholipid biosynthesis that contains a bHLH domain. The Ino2p.Ino4p complex binds to a fragment of the INO1 promoter containing two copies of the consensus binding site for the bHLH family of proteins. The complex formed when this DNA fragment is incubated with in vitro translated Ino2p and Ino4p is identical in mobility to the complex formed when this DNA fragment is incubated with whole cell extracts. The binding of DNA by the Ino2p.Ino4p complex is competed by an oligonucleotide containing the consensus binding sequence for bHLH proteins. Neither Ino2p nor Ino4p translated alone is capable of forming a complex with the INO1 promoter fragment. The two products, translated separately and mixed, show only reduced capability to form a complex compared with cotranslated proteins. Immunoprecipitation experiments demonstrate that Ino2p and Ino4p interact in the absence of DNA. Ino2p and Ino4p are, thus, both necessary and sufficient for formation of a complex with the INO1 promoter.