We isolated a mutation (rlr1-1; required for lacZ RNA) in the Saccharomyces cerevisiae (Sc) RLR1 gene as a suppressor of sin4, a component of the Mediator subcomplex of the RNA polymerase II holoenzyme and a determinant of chromatin structure. RLR1 encodes a deduced protein found also in fission yeast, nematode worms, and humans. The presence of these orthologs suggests that Rlr1 family members comprise a class of putative KEKE motif-containing proteins, characteristic of certain chaperones as well as regulators and subunits of the mammalian 20S proteasome. A role for RLR1 (THO2) in transcription appears to occur at a step subsequent to transcription initiation (see also Piruat, J.I. and Aguilera, A., 1998. EMBO J. 17, 4859-4872); Sc genes fused to the reporter gene lacZ were expressed at a very low level, while the corresponding native chromosomal genes were expressed at approximately normal levels in rlr1 mutants. Our studies show that rlr1 mutations cause a wide range of growth defects in addition to their novel affect on lacZ.