Nuclear receptors (NRs) can function as ligandinducible transregulators in both mammalian and yeast cells, indicating that important features of transcriptional control have been conserved throughout evolution. We report here the isolation and characterization of an essential yeast protein of unknown function, PSU1, which exhibits properties expected for a co-activator/mediator of the ligand-dependent activation function AF-2 present in the ligand-binding domain (LBD, region E) of NRs. PSU1 interacts in a ligand-dependent manner with the LBD of several NRs, including retinoic acid (RARalpha), retinoid X (RXRalpha), thyroid hormone (TRalpha), vitamin D3 (VDR) and oestrogen (ERalpha) receptors. Importantly, both in yeast and in vitro, these interactions require the integrity of the AF-2 activating domain. When tethered to a heterologous DNA-binding domain, PSU1 can activate transcription on its own. By using yeast reporter cells that express PSU1 conditionally, we show that PSU1 is required for transactivation by the AF-2 of ERalpha. Taken together these data suggest that in yeast, PSU1 is involved in ligand-dependent transactivation by NRs. Sequence analysis revealed that in addition to a highly conserved motif found in a family of MutT-related proteins, PSU1 contains several alpha-helical leucine-rich motifs sharing the consensus sequence LLxPhiL (x, any amino acid; Phi, hydrophobic amino acid) in regions that elicit either transactivation or NR-binding activity.