The product of the Saccharomyces cerevisiae LEU3 gene, Leu3p, is a transcriptional activator which regulates leucine biosynthesis in response to intracellular levels of leucine through the biosynthetic intermediate alpha-isopropylmalate. We devised a novel assay to examine the DNA site occupancy of Leu3p under different growth conditions, using a reporter gene with internal Leu3p-binding sites. Expression of the reporter is inhibited by binding of nuclear Leu3p to these sites; inhibition is dependent on the presence of the sites in the reporter, on the integrity of the Leu3p DNA-binding domain, and, surprisingly, on the presence of a transcriptional activation domain in the inhibiting protein. By this assay, Leu3p was found to occupy its binding site under all conditions tested, including high and low levels of leucine and in the presence and absence of alpha-isopropylmalate. The localization of Leu3p to the nucleus was confirmed by immunofluorescence staining of cells expressing epitope-tagged Leu3p derivatives. We conclude that Leu3p regulates transcription in vivo without changing its intracellular localization and DNA site occupancy.