Signalling by steroid hormones is mediated by receptor proteins that bind hormonal ligands and regulate the transcription of specific genes. The heat-shock protein hsp90 seems to associate selectively with unliganded receptors (aporeceptors), but it has not been determined whether this interaction affects receptor function in vivo. To address the role of hsp90, we have taken advantage of the capacity of mammalian steroid receptors to function in yeast. We constructed a strain of Saccharomyces cerevisiae in which hsp90 expression was regulatable and could be reduced more than 20-fold relative to wild type. At low levels of hsp90, aporeceptors seem to be mostly hsp90-free, yet fail to enhance transcription; on hormone addition, the receptors are activated but with markedly reduced efficiency. Thus hsp90 does not inhibit receptor function solely by steric interference; rather, hsp90 seems to facilitate the subsequent response of the aporeceptor to the hormonal signal. This is the first biological evidence that hsp90 acts in the signal transduction pathway for steroid receptors.