We have identified a transcriptional switch at the early promoter region of bacteriophage HP1. This switch controls the transcription of the early lytic operon from the P(R1) and P(R2) promoters and the transcription of the lysogenic operon from the P(L) promoter. The start sites of the three promoters were mapped, and using a chloramphenicol acetyl transferase assay, we have investigated the levels of transcription from the promoters in the absence or in the presence of two phage-encoded transcription factors: HP1 Cox and HP1 Cl. The HP1 Cox protein repressed the production of P(L) transcripts 30-fold, while the HP1 Cl protein repressed lytic transcription at least 70-fold. Binding sites for HP1 Cox and Cl were identified in the early promoter region; mutations of these sites eliminated transcriptional repression. In addition, a mutant Cl protein was isolated which is temperature sensitive for repression. Taken together, these data demonstrate the reciprocal regulation of a transcriptional switch in which the actions of the two phage-encoded proteins at the phage early promoters determine the choice between lytic and lysogenic growth.