Deletion analysis was used to identify sequences upstream of the ADH2 gene of Saccharomyces cerevisiae that are required for its regulation. S' and 3' internal deletions of the ADH2 control region were created in vitro, and the fragments were ligated adjacent to the ADHI promoter and structural gene. Hybrid genes with 3' deletions extending from -119 to -216 (the start site of ADH2 transcription is designated + 1) were fully repressed and derepressed to high levels. Hybrid genes with 3' deletions extending from -119 to -257 were repressed but failed to significantly derepress. Hybrid genes lacking the -216 to -257 region also failed to respond to ADRI-5c, a mutant allele of the unlinked regulatory gene ADRI, which confers constitutive expression on ADH2. This implies that the region between these deletion endpoints, which includes a 22-base-pair sequence of dyad symmetry, is required for efficient derepression of an adjacent promoter. Internal deletions extending in the 3' direction from position -1141 confirmed these results. Deletion mutants lacking the region -1141 to -259 were normally regulated, whereas deletions extending from -1141 to -115 were not derepressible. These results support the hypotheses that the ADH2 promoter may normally be in an inactive conformation in the yeast chromosome and that derepression of ADH2 requires positive activation mediated through an upstream activation sequence located between 216 and 257 base pairs 5' to the start site of ADH2 transcription. No evidence for a DNA sequence mediating repression was obtained.