We show that expression of the iso-1-cytochrome c gene of Saccharomyces cerevisiae, CYC1, is tightly regulated by levels of intracellular heme. Expression is reduced at least 200-fold in cells grown under conditions of heme deficiency. Studies on the regulation of a CYC1-lacZ fused gene and direct determination of mRNA levels indicate that this control is transcriptional. Furthermore, we show that the heme regulatory site in the CYC1 promoter region is an upstream activation site (UASc) centered about 275 bp upstream from the region of transcriptional initiation. The latter region is required for optimal transcription and contains three TATA box sequences and six prominent mRNA initiation sites that span 34 bp. Substitution of the UASc with the UAS of the yeast GAL10 gene results in activation of the normal set of CYC1 transcripts. In this case, however, transcription is independent of regulation by heme, suggesting that in the wildtype, heme controls initiation per se and not translation or mRNA stability.