Conditions for transcription and nucleosome assembly of plasmids bearing Xenopus 5S RNA genes have been monitored in the whole oocyte S-150 extract (1). We find that the optimal conditions for transcription differ substantially from optimal conditions for nucleosome assembly. DNA molecules bearing as few as 50% of the native density of nucleosomes are transcriptionally inert. Although the 5S gene-specific transcription factor TFIIIA is in excess in this extract, these nucleosome reconstitutes do not exhibit TFIIA-like DNase footprints nor do these reconstitutes bind exogenous TFIIIA. We have also examined the nucleotide requirement for DNA supercoiling and for generation of 5S gene transcription complexes. Supercoiling associated with nucleosome assembly does not require ATP; however, nucleotide hydrolysis is required for establishment of active complexes. Phosphorylation of a 200 kdalton protein occurs in a 5S DNA-dependent manner concurrent with the generation of primed transcription complexes. Results of nondenaturing gel electrophoresis coupled with a second dimension of SDS gel electrophoresis suggest that the 200 kD protein may be a component of the 5S RNA gene transcription complex.