Gene expression is determined by a combination of transcriptional and post-transcriptional regulatory events that were thought to occur independently. This report demonstrates that the genes associated with the Snf3p-Rgt2p glucose-sensing pathway are regulated by interconnected transcription repression and RNA degradation. Deletion of the dsRNA-specific ribonuclease III Rnt1p increased the expression of Snf3p-Rgt2p-associated transcription factors in vivo and the recombinant enzyme degraded their messenger RNA in vitro. Surprisingly, Rnt1ps effect on gene expression in vivo was both RNA and promoter dependent, thus linking RNA degradation to transcription. Strikingly, deletion of RNT1-induced promoter-specific transcription of the glucose sensing genes even in the absence of RNA cleavage signals. Together, the results presented here support a model in which co-transcriptional RNA degradation increases the efficiency of gene repression, thereby allowing an effective cellular response to the continuous changes in nutrient concentrations.