To search for histone domains that may regulate transcription in vivo, we made deletions and amino acid substitutions in the histone N-termini of S. cerevisiae. Histone H4 N-terminal residues 4-23, which include the extremely conserved, reversibly acetylated lysines (at positions 5, 8, 12, and 16), were found to encompass a region required for the activation of the GAL1 promoter. Deletions in the H4 N-terminus reduce GAL1 activation 20-fold. This effect is specific to histone H4 in that large deletions in the N-termini of H2A, H2B, and H3 do not similarly decrease induction. Activation of the PHO5 promoter is reduced approximately 4- to 5-fold by these H4 deletions. Mutations in histone H4 acetylation sites and surrounding residues can cause comparable and, in some cases, even greater effects on induction of these two promoters. We postulate that the H4 N-terminus may interact with a component of the transcription initiation complex, allowing nucleosome unfolding and subsequent initiation.