In a reconstituted system consisting of partially purified RNA polymerase I (pol I) and the initiation factors TIF-IA, TIF-IB, and TIF-IC, the nucleolar factor UBF (upstream binding factor) stimulates transcription from the rRNA-encoding DNA (rDNA) promoter at least 50-fold. This activation is not observed at high template concentrations or in the presence of highly purified pol I. Template commitment experiments suggest that UBF activates transcription by relieving inhibition exerted by a negative-acting factor(s) in the polymerase fraction that competes for TIF-IB binding to the rDNA promoter and prevents the formation of preinitiation complexes. Using purified histone H1 bound to DNA as a model for the repressed state of the rDNA promoter, we show that UBF counteracts H1-mediated repression of pol I transcription. The implications of these findings are discussed with respect to the protein-protein and protein-DNA interactions at the rDNA promoter and the possible involvement of UBF in control of ribosomal gene transcription.