The Saccharomyces cerevisiae gene PHO5 is an excellent system with which to study regulated changes in chromatin structure. The PHO5 promoter is packaged into four positioned nucleosomes under repressing conditions; upon induction, the structure of these nucleosomes is altered such that the promoter DNA becomes accessible to nucleases. We report here the development and characterization of an in vitro system in which partially purified PHO5 minichromosomes undergo promoter chromatin remodeling. Several hallmarks of the PHO5 chromatin transition in vivo were reproduced in this system. Chromatin remodeling of PHO5 minichromosomes required the transcription factors Pho4 and Pho2, was localized to the promoter region of PHO5, and was independent of the chromatin-remodeling complex Swi-Snf. In vitro chromatin remodeling also required the addition of fractionated nuclear extract and hydrolyzable ATP. This in vitro system should serve as a useful tool for identifying the components required for this reaction and for elucidating the mechanism by which the PHO5 promoter chromatin structure is changed.The packaging of eukaryotic DNA into nucleosomes presents a barrier to cellular processes that require specific contacts with DNA. During transcription, sequence-specific DNA binding proteins and the basal transcription apparatus must recognize and bind to appropriate promoter elements. Biochemical and genetic analyses demonstrate that the packaging of DNA into nucleosomes inhibits its stable association with transcription factors (2,29,37,57). A number of cellular activities capable of facilitating factor binding to chromatin have been identified (3). These activities are thought to function by directly modifying chromatin structure.The Saccharomyces cerevisiae gene PHO5 is a well-characterized system with which to study regulated gene expression. PHO5 encodes a secreted acid phosphatase whose transcription is regulated in response to environmental phosphate levels (for a review, see reference 32). When phosphate is plentiful, PHO5 expression is repressed; when phosphate is limiting, PHO5 expression is induced. Activation of PHO5 transcription requires two transcription factors: Pho4, a basic helix-loophelix protein, and Pho2, a homeodomain protein (58). In vitro, Pho2 enhances the binding of Pho4 to two regulatory sequences in the PHO5 promoter, UASp1 and UASp2 (4, 5).When transcription of PHO5 is activated, its promoter undergoes a dramatic change in chromatin structure (for a review, see reference 51). When yeast cells are grown in highphosphate medium, two pairs of positioned nucleosomes flank a DNase I-hypersensitive site, which contains UASp1 (Fig. 1, ϩP i ). UASp2 and the TATA box are packaged into nucleosomes Ϫ2 and Ϫ1, respectively. In vivo footprinting experiments indicate that Pho4 does not bind the PHO5 promoter under repressing conditions (57). When environmental phosphate is limiting, the positioned nucleosomes no longer protect the PHO5 promoter, and Pho4 binds to UASp1 and UASp2 (Fig. 1, ϪP i ). In vivo foo...