Transcription of ribosomal genes assembled into chromatin requires bin
ding of the transcription termination factor TTF-I to the promoter-pro
ximal terminator To, To analyze the mechanism of TTF-I-mediated transc
riptional activation, we have used mutant templates with altered seque
nce, polarity and distance of To with respect to the transcription sta
rt site, Transcription activation by TTF-I is chromatin specific and r
equires the precise positioning of the terminator relative to the prom
oter, Whereas termination by TTF-I depends on the correct orientation
of a terminator, TTF-I-mediated transcriptional activation is orientat
ion independent. TTF-I can bind to nucleosomal DNA in the absence of e
nzymatic activities that destabilize nucleosome structure. Chromatin-b
ound TTF-I synergizes with ATP-dependent cofactors present in extracts
of Drosophila embryos and mouse cells to position a nucleosome over t
he rDNA promoter and the transcription start site. Nucleosome position
ing correlates tightly with the activation of rDNA transcription. We s
uggest that transcriptional activation by TTF-I is a stepwise process
involving the creation of a defined promoter architecture and that the
positioning of a nucleosome is compatible with, if not a prerequisite
for, transcription initiation from rDNA chromatin.