The ubiquitin-proteasome system (UPS) promotes the destruction of target proteins by attaching to them a ubiquitin chain that is recognized by the 26S proteasome. The UPS influences most cellular processes, and its targets include transcriptional activators that are primary determinants of gene expression. Emerging evidence indicates that non-proteolytic functions of the UPS might stimulate transcriptional activity. Here we show that the proteolysis of some transcriptional activators by the UPS can stimulate their function. We focused on the role of UPS-dependent proteolysis in the function of inducible transcriptional activators in yeast, and found that inhibition of the proteasome reduced transcription of the targets of the activators Gcn4, Gal4 and Ino2/4. In addition, mutations in SCF(Cdc4), the ubiquitin ligase for Gcn4 (ref. 5), or mutations in ubiquitin that prevent degradation, also impaired the transcription of Gcn4 targets. These transcriptional defects were manifested despite the enhanced abundance of Gcn4 on cognate promoters. Proteasome inhibition also decreased the association of RNA polymerase II with Gcn4, Gal4 and Ino2/4 targets, as did mutations in SCF(Cdc4) for Gcn4 targets. Expression of a stable phospho-site mutant of Gcn4 (ref. 7) or disruption of the kinases that target Gcn4 for turnover alleviated the sensitivity of Gcn4 activity to defects in the UPS.