Transcription factor beta gamma (RAP30/74) from rat liver was previously shown in biochemical studies to control the binding of RNA polymerase II to promoters by a mechanism analogous to that utilized by bacterial sigma factors, by decreasing the affinity of polymerase for nonpromoter sites on DNA and by increasing the affinity of the enzyme for the preinitiation complex (Conaway, R. C., Garrett, K. P., Hanley, J. P., and Conaway, J. W. (1991) Proc. Natl. Acad. Sci. U.S.A. 88, 6205-6209). By constructing and analyzing mutants of beta gamma, we have identified a novel functional domain located in the carboxyl terminus of the gamma (RAP30) subunit. This domain shares sequence similarity with region 4 of bacterial sigma factors; in particular, it exhibits striking similarity to the carboxyl-terminal regions 4.1 and 4.2 of SpoIIIC (Bacillus subtilis sigma k). Evidence from biochemical studies argues that a mutant gamma (RAP30), lacking amino acid sequences similar to sigma homology region 4.2, is able to assemble with the beta (RAP74) subunit to form a mutant beta gamma (RAP30/74) with impaired ability to interact with RNA polymerase II.