Peroxisomes have a central function in lipid metabolism, and it is well established that these organelles are inducible by many compounds including fatty acids. Peroxisomes are the sole site for the beta-oxidation of fatty acids in yeast. The first and rate-limiting enzyme of this cycle is fatty acyl-CoA oxidase. The gene encoding this enzyme in Saccharomyces cerevisiae (POX1) undergoes a complex regulation that is dependent on the growth environment. When this yeast is grown in medium containing oleic acid as the main carbon source, peroxisomes are induced and POX1 expression is activated. When cells are grown in the presence of glucose, the expression of POX1 mRNA is repressed, whereas growth on a carbon source such as glycerol or raffinose causes derepression. This rigorous regulation is brought about by the complex interactions between trans-acting factors and cis-elements in the POX1 promoter. Previously, we characterized regulatory elements in the promoter region of POX1 that are involved in the repression and activation of this gene (Wang, T., Luo, Y., and Small, G. M. (1994) J. Biol. Chem. 269, 24480-24485). In this study we have purified and identified an oleate-activated transcription factor (Oaf1p) that binds to the activating sequence (UAS1) in the POX1 gene. The protein has a predicted molecular mass of approximately 118 kDa.