We report that coactivator SAGA, containing the HAT Gcn5p, occupies the GAL1 and ARG1 coding sequences during transcriptional induction, dependent on PIC assembly and Ser5 phosphorylation of the Pol II CTD. Induction of GAL1 increases H3 acetylation per nucleosome in the ORF, dependent on SAGA integrity but not the alternative Gcn5p-HAT complex ADA. Unexpectedly, H3 acetylation in ARG1 coding sequences does not increase during induction due to the opposing activities of multiple HDAs associated with the ORF. Remarkably, inactivation of Gcn5p decreases nucleosome eviction from both GAL1 and a long ( approximately 8 kb) ORF transcribed from the GAL1 promoter. This is associated with reduced Pol II occupancy at the 3' end and decreased mRNA production, selectively, for the long ORF. Gcn5p also enhances H3-K4 trimethylation in the ARG1 ORF and bulk histones. Thus, Gcn5p, most likely in SAGA, stimulates modification and eviction of nucleosomes in transcribed coding sequences and promotes Pol II elongation.