The chromatin fine structure in the promoter region of PHO5, the structural gene for a strongly regulated acid phosphatase in yeast, was analyzed. An upstream activating sequence 367 bp away from the start of the coding sequence that is essential for gene induction was found to reside in the center of a hypersensitive region under conditions of PHO5 repression. Under these conditions three related elements at positions -469, -245 and -185 are contained within precisely positioned nucleosomes located on both sides of the hypersensitive region. Upon PHO5 induction the chromatin structure of the promoter undergoes a defined transition, in the course of which two nucleosomes upstream and two nucleosomes downstream of the hypersensitive site are selectively removed. In this way approximately 600 bp upstream of the PHO5 coding sequence become highly accessible and all four elements are free to interact with putative regulatory proteins. These findings suggest a mechanism by which the chromatin structure participates in the functioning of a regulated promoter.