We describe a cell-free system in which the transcription of the yeast metallothionein gene is inducible by the addition of metal ions plus a specific regulatory protein. Efficient transcription requires the complete yeast ACE1 metalloregulatory protein, including both its DNA-binding and transactivation domains; a mouse nuclear extract providing RNA polymerase and general transcription factors; a template containing the ACE1 binding site; and Cu(I). Because the binding of ACE1 to DNA is dependent on Cu, it is possible to inhibit transcription by the use of Cu-complexing agents such as CN-. We have used this specific inhibition to show that the ACE1 regulatory protein is required for the maintenance as well as the formation of a functional preinitiation complex. The ability to reversibly induce yeast metallothionein gene transcription in vitro provides a powerful system for determining the molecular mechanism of a simple eukaryotic regulatory circuit.