The activation of gene transcription by nuclear receptors is invariably associated with alterations in chromatin structure at hormone-responsive elements of target genes. To identify the molecular functions underlying receptor-mediated chromatin structure alterations we have evaluated the effects of DNA binding and transactivation of estrogen receptor derivatives on the promoter chromatin structure of estrogen-responsive reporter minichromosomes in Saccharomyces cerevisiae. We report here that the DNase I-hypersensitive chromatin structure at the promoter region is not simply a consequence of estrogen receptor binding to estrogen-responsive elements but is greatly enhanced by transactivation functions. These chromatin structure alterations are dependent on the presence of more than one estrogen-responsive element as well as downstream promoter sequences and appear to be correlated with transcriptional competence of the promoter. Our results imply that a disruption of chromatin structure at promoters is associated with the establishment of active transcription complexes. Since RNA polymerase cannot initiate transcription on nucleosomal DNA in vitro (Lorch, Y., Lapointe, J.W., and Kornberg, R.D. (1987) Cell 49, 203-210) this local disruption of chromatin structure may represent a nucleosome-free window, allowing initiation to occur in vivo.