A genomic DNA fragment from yeast was isolated by transforming a temperature sensitive pet mutant. This mutant, pet-ts 798, has previously been characterized by its altered mitochondrial transcription apparatus. Subcloning and DNA sequencing of the genomic DNA fragment identified a reading frame responsible for the restoration of the pet-ts phenotype. The reading frame of 1023 bp is transcribed as an RNA of about 1100 nucleotides. The putative protein of 40 kDa possesses a hydrophobic amino-terminus and acidic and basic domains characteristic of recently described transcriptional activators. The inactivation of the functional gene by the introduction of an insertion fragment into the reading frame, leads to a stable pet phenotype. Further analysis of this mutant created by gene disruption makes clear that the respiratory defect is caused by the complete loss of mitochondrial DNA. Experimental evidence is given that the cloned gene acts as an intergenic suppressor of the mutant pet-ts 798. Therefore, the isolated gene represents a new factor involved in the regulation of mitochondrial replication and transcription.