A genetic screen for mutants that affect the activity of internal regulatory sequences of Ty retrotransposons led to the identification of a new gene encoding a DNA-binding protein that interacts with the downstream enhancer-like region of Ty1 elements. The TEA1 (Ty enhancer activator) gene sequence predicts a protein of 86.9 kDa whose N terminus contains a zinc cluster and dimerization motif typical of the Gal4-type family of DNA-binding proteins. The C terminus encodes an acidic domain with a net negative charge of -10 and the ability to mediate transcriptional activation. Like other zinc cluster proteins, purified Tea1 was found to bind to a partially palindromic CGGNxCCG repeat motif located in the Ty1 enhancer region. The Ty1 Tea1 binding site has a spacing of 10 and is located near binding sites for the DNA-binding proteins Rap1 and Mcm1. Analysis of the phenotype of tea1 deletion mutants confirmed that the TEA1 gene is required for activation from the internal Ty1 enhancer characterized in this study and makes a modest contribution to normal Ty1 levels in the cell. Hence, Tea1, like Rap1, is a member of a small family of downstream activators in Saccharomyces cerevisiae. Further analysis of the Tea1 protein and its interactions may provide insight into the mechanism of downstream activation in yeast cells.