To understand the principles of control and selectivity in gene expression, the biochemical mechanisms by which promoter- and enhancer-binding factors regulate transcription by RNA polymerase II were analyzed. A general observed repressor of transcription was purified and identified as histone H1. Since many aspects of H1 binding to naked DNA resemble its interaction with chromatin, purified H1 bound to naked DNA was used as a model for the repressed state of the DNA template. Three sequence-specific transcription factors, Sp1, GAL4-VP16, and GAGA factor, were shown to counteract H1-mediated repression (antirepression). In addition, Sp1 and GAL4-VP16, but not the GAGA factor, activated transcription in the absence of H1. Therefore, true activation and antirepression appear to be distinct activities of sequence-specific factors. Furthermore, transcription antirepression by GAL4-VP16 was sustained for several rounds of transcription. These findings, together with previous studies on H1, suggest that H1 participates in repression of the genome in the ground state and that sequence-specific transcription factors induce selected genes by a combination of true activation and release of basal repression that is mediated at least in part by H1.