The transcriptional activation of eukaryotic class II genes by sequence-specific regulatory proteins requires cofactors in addition to the general transcription factors. One cofactor (termed PC3) was purified from HeLa cells and identified by sequence analysis and functional assays as human DNA topoisomerase I (EC5.99.1.2). Under identical conditions PC3 mediates both a net activation of transcription by the acidic activator GAL4-AH and repression of basal transcription, thereby leading to a large induction of transcription by the activator. PC3-mediated activation of transcription is dependent on the presence of both the GAL4-AH activation domain and the TATA-binding protein (TBP)-associated-factors (TAFs) in natural transcription factor TFIID, while repression of basal transcription is observed with either TFIID or the derived TBP alone. These results suggest novel functions, apparently through distinct mechanisms, for human DNA topoisomerase I in the regulation of transcription initiation by RNA polymerase II.