The Aspergillus nidulans zinc finger transcription factor PacC is activated by proteolytic processing in response to ambient alkaline pH. The pH-regulated step is the transition of full-length PacC from a closed to an open, protease-accessible conformation. Here we show that in the absence of ambient pH signaling, the C-terminal negative-acting domain prevents the nuclear localization of full-length closed PacC. In contrast, the processed PacC form is almost exclusively nuclear at any ambient pH. In the presence of ambient pH signaling, the fraction of PacC that is in the open conformation but has not yet been processed localizes to the nucleus. Therefore, ambient alkaline pH leads to an increase in nuclear PacC by promoting the proteolytic elimination of the negative-acting domain to yield the processed form and by increasing the proportion of full-length protein that is in the open conformation. These findings explain why mutations resulting in commitment of PacC to processing irrespective of ambient pH lead to permanent PacC activation and alkalinity mimicry. A nuclear import signal that targets Escherichia coli -galactosidase to the nucleus has been located to the PacC zinc finger region. A mutation abolishing DNA binding does not prevent nuclear localization of the processed form, showing that PacC processing does not lead to nuclear localization by passive diffusion of the protein made possible by the reduction in size, followed by retention in the nucleus after DNA binding.Proteolytic processing activation of transcription factors in response to their cognate environmental signals occurs across distant groups of eukaryotic organisms. pH regulation of gene expression in the mold Aspergillus nidulans is one such example. Here, the key regulatory zinc finger protein PacC activates alkaline genes and represses acidic genes according to the needs imposed by ambient pH, thereby providing the organism with one prerequisite for growing in environments as acidic as pH 2.5 or as alkaline as pH 10.5 (7, 59). Other prototypical members of the group of transcription factors activated by proteolytic processing are the immune and inflammatory response regulator NF-B (23, 58), the Drosophila melanogaster cubitus interruptus (Ci) zinc finger factor (the transducer of the hedgehog signal) (29, 53), and the sterol regulatory elementbinding protein (SREBP), which switches on genes for cholesterol biosynthesis and fat metabolism (5, 6).The zinc finger transcription factor PacC is synthesized as a 674-residue precursor. At alkaline ambient pH, a signal transmitted to PacC by the orphan pal gene signal transduction pathway (13,14,37,43,44) results in a conformational change leading to an open conformation in which PacC is accessible to a processing protease (18,41,47). This protease removes ϳ400 residues from the C terminus, which includes a negative-acting domain. The resulting product (248 to 250 residues) (41) is fully competent in transcriptional regulation through 5Ј-GCC ARG-3Ј sites (20) in the promoters of both alkaline...