Regulation of the GAL genes of Saccharomyces cerevisiae is determined by the interplay of the transcriptional activator Gal4p and the repressor Gal80p, which binds and masks the activation domain of Gal4p under non-inducing conditions. Here we demonstrate that Gal80p dimerizes with high affinity and that this dimerization appears to stabilize the Gal4p-Gal80p interaction and also, indirectly, the Gal4p-DNA interaction in a (Gal4p)2(Gal80p)2DNA complex. In addition, Gal80 dimers transiently interact with each other to form higher order multimers. We provide evidence that adjacent Gal4p binding sites, when correctly spaced, greatly stabilize Gal80p dimer-dimer interactions and that this stabilization results in the complete repression of GAL genes with multiple Gal4p binding sites. In contrast, GAL genes under the control of a single Gal4p binding site do not stabilize Gal80p multimers, resulting in significant and biologically important transcriptional leakage. Cooperative binding experiments indicate that Gal80p dimer-dimer interaction probably does not lead to a stronger Gal4p-Gal80p interaction, but most likely to a more complete shielding of the Gal4p activation domain.