In order to study the transactivational property of the X gene in the methylotropic yeast Pichia pastoris, a Rous sarcoma virus-chloramphenicol acetyltransferase (RSV-CAT) cassette was co-transformed and integrated into the host yeast strain as a reporter which showed an overwhelming CAT activity. Immunoprecipitation of the yeast cell extracts with an X-specific monoclonal antibody, however, showed a low level expression of the X gene. Therefore besides a trans-effect of the X protein, the enhanced reporter activity could be a manifestation of a cis-effect of the X gene sequences also. Therefore, unlike the transactivation studies with X gene in animal cells where limited functional activity is observed, P. pastoris appears to be an excellent system to study cis- and trans-aspects of gene regulation by the X gene.