We describe the identification and characterization of a transcription factor encoded by the atf1+ gene of the fission yeast Schizosaccharomyces pombe. The factor Atf1, contains a bZIP domain at its C-terminus with strong homology to members of the ATF/CREB family of mammalian factors and in vitro binds specifically to ATF/CRE recognition sites. Furthermore the ATF-like binding activity detected in extracts from fission yeast cells is entirely lost upon deletion of the atf1+ gene. Upon growth to saturation, fission yeast cells exit the mitotic cycle and enter a G0-like stationary phase. However, on rich medium, entry of atf1- cells into stationary phase is restricted and they rapidly lose viability; this does not occur on minimal medium unless cAMP levels are raised. Thus stationary phase entry appears to be regulated negatively by cAMP and positively by Atf1. atf1- cells are also sterile and this sterility appears to be due to a combination of two defects: first, upon nitrogen starvation the majority of atf1- cells fail to arrest in the G1 phase of the cell cycle and second, the induction of ste11+ expression is lost. Thus expression of ste11+ represents a second example of an event that is negatively regulated by the cAMP pathway and positively regulated by Atf1. Despite their close association however, these two regulatory pathways function independently and Atf1 activity is not directly modulated by cAMP levels or mutations that alter the activity of components of the cAMP signalling pathway. Thus Atf1 is a transcription factor that plays an important role in the response of cells to adverse environmental conditions, which is to exit the mitotic cell cycle and either sexually differentiate or enter a resting state.