The CSRE (carbon source-responsive element) is a sequence motif responsible for the transcriptional activation of gluconeogenic structural genes in Saccharomyces cerevisiae. We have isolated a regulatory gene, DIL1 (derepression of isocitrate lyase, = CAT8), which is specifically required for derepression of CSRE-dependent genes. Expression of CAT8 is carbon source regulated and requires a functional Cat1p (Snf1p) protein kinase. The derepression defect of CAT8 in a cat1 mutant could be suppressed by a mutant Mig1p repressor protein. Derepression of CAT8 also requires a functional HAP2 gene, suggesting a regulatory connection between respiratory and gluconeogenic genes. Carbon source-dependent protein-CSRE complexes detected in a gel retardation analysis with wild-type extracts were absent in cat8 mutant extracts. However, similar experiments with an epitope-tagged CAT8 gene product in the presence of tag-specific antibodies gave evidence against a direct binding of Cat8p to the CSRE. A constitutively expressed GAL4-CAT8 fusion gene revealed a carbon source-dependent transcriptional activation of a UAS(GAL)-containing reporter gene. Activation mediated by Cat8p was no longer detectable in a cat1 mutant. Thus, biosynthetic control of CAT8 as well as transcriptional activation by Cat8p requires a functional Cat1p protein kinase. A model proposing CAT8 as a specific activator of a transcription factor(s) binding to the CSRE is discussed.