We have isolated two independent mutations in the DNA-binding domain of the rat glucocorticoid receptor, P493R and $459A, that implicate DNA binding in the control of attached transcriptional activation domains, either that of the receptor itself or of VP16. The mutants are capable of activating transcription normally, but unlike wild-type receptors, they interfere with particular transcriptional activators in yeast and mammalian cells, and inhibit growth when overexpressed in yeast. The mutant residues reside at positions within the three-dimensional structure of the receptor that could, in principle, transduce structural changes from the DNA-binding surface of the receptor to other functional domains. These findings, together with the salt dependence of specific and nonspecific DNA binding by these receptors, suggest that specific DNA acts as an aUosteric effector that directs the functional interaction of the receptor with targets of transcriptional activation and that the P493R and $459A mutants mimic the allosteric effect of specific DNA, allowing the receptor to interact with regulatory targets even in the absence of specific DNA binding. The interaction of DNA and site-specific DNA-binding proteins was classically considered as a "rigid body" association determined by the interaction of two preexisting and stable interfaces. However, it is now apparent that many DNA-protein interactions are accompanied by structural changes. DNA structure may be altered by interaction with proteins, and site-specific DNA-binding proteins may undergo conformational changes upon binding to DNA (Spolar and Record 1994). The dynamic nature of protein-DNA interactions raises the possibility that the final structure of the protein might depend upon the particular sequence to which it binds, that is, specific DNA sequences might act as allosteric effectors to determine the catalytic or regulatory activities of the protein. Restriction endonucleases, for example, are DNA-binding proteins whose catalytic functions are inactive on nonspecific DNA and active at specific sites. Allosteric effects of DNA sequence on endonuclease activity have been proposed for EcoRI (Heitman 1992) and demonstrated for NaeI, NarI, BspMI, HpaII, and SacII (Oller et al. 1991).Might the activities of transcriptional regulatory proteins similarly be governed or influenced by the DNA sequences to which they bind? The magnitude of activation or repression by a given factor commonly varies ~These authors contributed equally to this work.with "DNA context." In general, it has not been determined whether such context effects reflect the contributions of other transcriptional regulators bound nearby, or instead indicate a direct effect of DNA sequence on the disposition of a regulator. However, the correlation between site-specific conformations and site-specific activities of the transcription factors PRTF/MCM1 (Tan and Richmond 1990) and the p50 subunit of NF-KB (Fujita et al. 1992;Hay and Nicholson 1993) supports the idea that DNA-induced conformational chan...