The asexual spore is one of the most crucial factors contributing to the fecundity and fitness of filamentous fungi. Although the developmental activator FluG was shown to be necessary for activation of asexual sporulation (conidiation) and production of the carcinogenic mycotoxin sterigmatocystin (ST) in the model filamentous fungus Aspergillus nidulans, the molecular mechanisms underlying the developmental switch have remained elusive. In this study, we report that the FluG-mediated conidiation in A. nidulans occurs via derepression. Suppressor analyses of fluG led to the identification of the sfgA gene encoding a novel protein with the Gal4-type Zn(II) 2 Cys 6 binuclear cluster DNA-binding motif at the N terminus. Deletion (D) and 31 other loss-of-function sfgA mutations bypassed the need for fluG in conidiation and production of ST. Moreover, both DsfgA and DsfgA DfluG mutations resulted in identical phenotypes in growth, conidiation, and ST production, indicating that the primary role of FluG is to remove repressive effects imposed by SfgA. In accordance with the proposed regulatory role of SfgA, overexpression of sfgA inhibited conidiation and delayed/reduced expression of conidiation-and STspecific genes. Genetic analyses demonstrated that SfgA functions downstream of FluG but upstream of transcriptional activators (FlbD, FlbC, FlbB, and BrlA) necessary for normal conidiation.