Depending on promoter context, YY1 can activate or repress transcription, or provide a site for transcription initiation. To investigate whether the ability of YY1 to induce DNA bending influenced its ability to activate and repress transcription, simple synthetic promoters were constructed in which the YY1 binding site was inserted between the TATA box and either the NF1 or AP1 recognition sequences. In transient transfections of COS cells, the NF1YY1TATA and NF1RYY1TATA promoters exhibited a dramatic 15-20-fold increase in correctly initiated transcription. These promoters exhibited even larger 60-80-fold increases in transcription in HeLa cells. Neither multiple copies of the YY1 binding site alone, nor placement of a YY1 site upstream of the NF1 site activated transcription. Deletion of 4 bp between the NF1 and YY1 sites, which changes the phase of the DNA bends, abolished the 16-fold activation of transcription by NF1YY1TATA. Insertion of the YY1 site between the AP1 site and the TATA box decreased transcription approximately 3-fold. Replacing the YY1 binding site with an intrinsic DNA bending sequence mimicked this transcription repression. Sequences of similar length which do not bend DNA fail to repress AP1-mediated transcription. Gel mobility shift assays were used to show that binding of YY1 to its recognition sequence did not repress binding of AP1 to its recognition sequences. Our data indicate that YY1-induced DNA bending may activate and repress transcription by changing the spatial relationships between transcription activators and components of the basal transcription apparatus.