Gal4 is a prototypical eukaryotic transcriptional activator whose recruitment function is inhibited in the absence of galactose by the Gal80 protein through masking of its transcriptional activation domain (AD). A long-standing nondissociation model posits that galactose-activated Gal3 interacts with Gal4-bound Gal80 at the promoter, yielding a tripartite Gal3-Gal80-Gal4 complex with altered Gal80-Gal4 conformation to enable Gal4 AD activity. Some recent data challenge this model, whereas other recent data support the model. To address this controversy, we imaged fluorescent-protein-tagged Gal80, Gal4, and Gal3 in live cells containing a novel GAL gene array. We find that Gal80 rapidly dissociates from Gal4 in response to galactose. Importantly, this dissociation is Gal3 dependent and concurrent with Gal4-activated GAL gene expression. When galactose-triggered dissociation is followed by galactose depletion, preexisting Gal80 reassociates with Gal4, indicating that sequestration of Gal80 by Gal3 contributes to the observed Gal80-Gal4 dissociation. Moreover, the ratio of nuclear Gal80 to cytoplasmic Gal80 decreases in response to Gal80-Gal3 interaction. Taken together, these and other results provide strong support for a GAL gene switch model wherein Gal80 rapidly dissociates from Gal4 through a mechanism that involves sequestration of Gal80 by galactose-activated Gal3.