A genetic selection method was developed for the cloning of positive- acting transcriptional regulatory genes in Saccharomyces cerevisiae. The method was applied for the isolation of activators of Trichoderma reesei (Hypocrea jecorina) cellulase genes. Activator genes were isolated from a T. reesei expression cDNA library on the basis of the ability of their translation products to activate transcription from the full-length T. reesei cbh1 promoter coupled to the S. cerevisiae HIS3 gene and to support the growth of the yeast colonies in the absence of histidine. Among the clones obtained was the ace1 gene encoding a novel polypeptide, ACEI, that contains three zinc finger motifs of Cys2-His2 type. Possible ACEI homologues were found among expressed sequence tags of Aspergillus and Neurospora. The ability of ACEI to bind to the cbh1 promoter was further confirmed in the yeast one-hybrid system. In vitro binding and gel mobility shift assays revealed several binding sites for the ACEI protein in the cbh1 promoter. Disruption of the ace1 gene in T. reesei resulted in retarded growth of the fungus on a cellulose-containing medium, on which cellulases are normally highly expressed.