The yeast Cyc8 and Tup1 proteins form a corepressor complex that, when tethered to DNA, turns off transcription. Release of the Cyc8-Tup1 corepressor from a promoter has been considered as a prerequisite for subsequent transcriptional activation. Contrasting this, we demonstrate that Cyc8-Tup1 is continuously associated with target promoters under both repressive and inducing conditions. At the GAL1 promoter, Cyc8-Tup1 facilitates recruitment of SAGA (Spt-Ada-Gcn5-acetyltranferase) via Cti6, a PHD domain protein that physically links the Cyc8-Tup1 and SAGA complexes. Lack of functional corepressor renders GAL1 transcription largely independent of specific SAGA subunits. Thus, corepressor's release is not the mechanism of derepression; instead, it is the coactivator complex that alleviates Cyc8-Tup1-mediated repression under induction conditions.