The DNA-binding transcriptional activator Gal4 and its regulators Gal80 and Gal3 constitute a galactose-responsive switch for the GAL genes of Saccharomyces cerevisiae. Gal4 binds to GAL gene UASGAL (upstream activation sequence in GAL gene promoter) sites as a dimer via its N-terminal domain and activates transcription via a C-terminal transcription activation domain (AD). In the absence of galactose, a Gal80 dimer binds to a dimer of Gal4, masking the Gal4AD. Galactose triggers Gal3-Gal80 interaction to rapidly initiate Gal4-mediated transcription activation. Just how Gal3 alters Gal80 to relieve Gal80 inhibition of Gal4 has been unknown, but previous analyses of Gal80 mutants suggested a possible competition between Gal3-Gal80 and Gal80 self-association interactions. Here we assayed Gal80-Gal80 interactions and tested for effects of Gal3. Immunoprecipitation, cross-linking, and denaturing and native PAGE analyses of Gal80 in vitro and fluorescence imaging of Gal80 in live cells show that Gal3-Gal80 interaction occurs concomitantly with a decrease in Gal80 multimers. Consistent with this, we find that newly discovered nuclear clusters of Gal80 dissipate in response to galactose-triggered Gal3-Gal80 interaction. We discuss the effect of Gal3 on the quaternary structure of Gal80 in light of the evidence pointing to multimeric Gal80 as the form required to inhibit Gal4.