Expression of nitrogen metabolism genes is regulated by the quality of the nitrogen supply. Here, we describe a mechanism for the transcriptional regulation of the general amino acid permease gene per1 in Schizosaccharomyces pombe. We show that when ammonia is used as the nitrogen source, low levels of per1 are transcribed and histones in the coding and surrounding regions of per1 are acetylated. In the presence of proline, per1 transcription is upregulated and initiates from a more upstream site, generating 5'-extended mRNAs. Concomitantly, histones at per1 are deacetylated in a Clr6-dependent manner, suggesting a positive role for Clr6 in transcriptional regulation of per1. Upstream initiation and histone deactylation of per1 are constitutive in cells lacking the serine/threonine kinase oca2, indicating that Oca2 is a repressor of per1. Oca2 interacts with a protein homologous to the Saccharomyces cerevisiae transcriptional activator Cha4 and with Ago1. Loss of Cha4 or Ago1 causes aberrant induction of per1 under noninducing conditions, suggesting that these proteins are also involved in per1 regulation and hence in nitrogen utilization.