The transmembrane kinase Ire1p is required for activation of the unfolded protein response (UPR), the increase in transcription of genes encoding endoplasmic reticulum (ER) resident proteins that occurs in response to the accumulation of unfolded proteins in the ER. Ire1p spans the ER membrane (or the nuclear membrane with which the ER is continuous), with its kinase domain localized in the cytoplasm or in the nucleus. Consistent with this arrangement, it has been proposed that Ire1p senses the accumulation of unfolded proteins in the ER and transmits the signal across the membrane toward the transcription machinery, possibly by phosphorylating downstream components of the UPR pathway. Molecular genetic and biochemical studies described here suggest that, as in the case of growth factor receptors of higher eukaryotic cells, Ire1p oligomerizes in response to the accumulation of unfolded proteins in the ER and is phosphorylated in trans by other Ire1p molecules as a result of oligomerization. In addition to its kinase domain, a C-terminal tail domain of Ire1p is required for induction of the UPR. The role of the tail is probably to bind other proteins that transmit the unfolded protein signal to the nucleus.