Gene looping juxtaposes the promoter and terminator regions of RNA polymerase II-transcribed genes in yeast and mammalian cells. Here we report an activator-dependent interaction of transcription initiation and termination factors during gene looping in budding yeast. Chromatin analysis revealed that MET16, INO1, and GAL1p-BUD3 are in a stable looped configuration during activated transcription. Looping was nearly abolished in the absence of transcription activators Met28, Ino2, and Gal4 of MET16, INO1, and GAL1p-BUD3 genes, respectively. The activator-independent increase in transcription was not accompanied by loop formation, thereby suggesting an essential role for activators in gene looping. The activators did not facilitate loop formation directly because they did not exhibit an interaction with the 3 end of the genes. Instead, activators physically interacted with the general transcription factor TFIIB when the genes were activated and in a looped configuration. TFIIB cross-linked to both the promoter and the terminator regions during the transcriptionally activated state of a gene. The presence of TFIIB on the terminator was dependent on the Rna15 component of CF1 3 end processing complex. Coimmunoprecipitation revealed a physical interaction of Rna15 with TFIIB. We propose that the activators facilitate gene looping through their interaction with TFIIB during transcriptional activation of genes.Transcription of protein encoding genes by RNA polymerase (RNAP) 2 II involves several distinct steps including the assembly of preinitiation complex, initiation, elongation, termination, and reinitiation (1, 2). Transcription starts with the recruitment of RNAP II and the general transcription factors TFIID, TFIIB, TFIIA, TFIIF, TFIIE, and TFIIH onto the promoter to form a preinitiation complex. RNAP II and general transcription factors are sufficient for accurate basal level transcription (2, 3). The response to activators requires additional cofactors that bring about stimulation of transcription by modifying chromatin structure in the promoter region and facilitating recruitment of RNAP II and general transcription factors to the exposed promoter (3-5). Once the gene is activated, the amount of transcripts produced is determined primarily by the number of reinitiation events (6). Despite the remarkable progress made in understanding the molecular mechanisms that govern initiation of transcription in eukaryotes, relatively little is known about the processes that mediate reinitiation.The studies with RNAP I and III have implicated proper termination as a prerequisite for reinitiation of transcription (7,8). During RNAP I and RNAP III-mediated transcription, termination factors help the polymerase to pause at the terminator region. This is followed by the release of the polymerase from the terminator. In RNAP I transcription, PTRF (Pol I and transcription release factor) facilitates release of the paused polymerase from the terminator region, whereas in RNAP III transcription, factor La performs an analogous fun...