Copper resistance in Saccharomyces cerevisiae is mediated, in large part, by the CUP1 locus, which encodes a low-molecular-weight, cysteine-rich metal-binding protein. Expression of the CUP1 gene is regulated at the level of transcriptional induction in response to high environmental copper levels. This report describes the isolation of a yeast mutant, ace1-1, which is defective in the activation of CUP1 expression upon exposure to exogenous copper. The ace1-1 mutation is recessive and lies in a genetic element that encodes a trans-acting CUP1 regulatory factor. The wild-type ACE1 gene was isolated by in vivo complementation and restores copper inducibility of CUP1 expression and copper resistance to the otherwise copper-sensitive ace1-1 mutant. Linkage analysis and gene deletion experiments verified that this gene represents the authentic ACE1 locus. ACE1 maps to the left arm of chromosome VII, 9 centimorgans centromere distal to lys5. The ACE1 gene appears to play a direct or indirect positive role in activation of CUP1 expression in response to elevated copper concentrations.