Transcription factors show rapid and reversible binding to chromatin in living cells, and transcription occurs in sporadic bursts, but how these phenomena are related is unknown. Using a combination of in vitro and in vivo single‐molecule imaging approaches, we directly correlated binding of the Gal4 transcription factor with the transcriptional bursting kinetics of the Gal4 target genes GAL3 and GAL10 in living yeast cells. We find that Gal4 dwell time sets the transcriptional burst size. Gal4 dwell time depends on the affinity of the binding site and is reduced by orders of magnitude by nucleosomes. Using a novel imaging platform called orbital tracking, we simultaneously tracked transcription factor binding and transcription at one locus, revealing the timing and correlation between Gal4 binding and transcription. Collectively, our data support a model in which multiple RNA polymerases initiate transcription during one burst as long as the transcription factor is bound to DNA, and bursts terminate upon transcription factor dissociation.