Protein-protein interactions between two proteins have generally been studied using biochemical techniques such as crosslinking, co-immunoprecipitation and co-fractionation by chromatography. We have generated a novel genetic system to study these interactions by taking advantage of the properties of the GAL4 protein of the yeast Saccharomyces cerevisiae. This protein is a transcriptional activator required for the expression of genes encoding enzymes of galactose utilization. It consists of two separable and functionally essential domains: an N-terminal domain which binds to specific DNA sequences (UASG); and a C-terminal domain containing acidic regions, which is necessary to activate transcription. We have generated a system of two hybrid proteins containing parts of GAL4: the GAL4 DNA-binding domain fused to a protein 'X' and a GAL4 activating region fused to a protein 'Y'. If X and Y can form a protein-protein complex and reconstitute proximity of the GAL4 domains, transcription of a gene regulated by UASG occurs. We have tested this system using two yeast proteins that are known to interact--SNF1 and SNF4. High transcriptional activity is obtained only when both hybrids are present in a cell. This system may be applicable as a general method to identify proteins that interact with a known protein by the use of a simple galactose selection.