We report here that the largest subunit of yeast RNA polymerase II contains an acidic domain that is similar to acidic activators of transcription. This domain includes the highly conserved homology box H. A hybrid protein containing this acidic domain fused to the DNA-binding domain of GAL4 is a potent activator of transcription in the yeast Saccharomyces cerevisiae. Interestingly, mutations that reduce the upstream activating activity of this acidic domain also abolish the normal function of RNA polymerase II. Such functional defects can be rescued by the acidic activation domains of VP16 and GAL4 when inserted into the mutant derivatives of RNA polymerase II. We further show that this acidic domain of RNA polymerase II interacts directly with two general transcription factors, the TATA-binding protein and TFIIB, and that the acidic activation domain of VP16 can compete specifically with the acidic domain of the RNA polymerase for these interactions. We discuss the implications of this finding for the mechanisms of transcriptional activation in eucaryotes.