Cycloheximide inhibits ribosomal DNA (rDNA) transcription in vivo. The mouse homologue of yeast Rrn3, a polymerase-associated transcription initiation factor, can complement extracts from cycloheximide-treated mammalian cells. Cycloheximide inhibits the phosphorylation of Rrn3 and causes its dissociation from RNA polymerase I. Rrn3 interacts with the rpa43 subunit of RNA polymerase I, and treatment with cycloheximide inhibits the formation of a Rrn3.rpa43 complex in vivo. Rrn3 produced in Sf9 cells but not in bacteria interacts with rpa43 in vitro, and such interaction is dependent upon the phosphorylation state of Rrn3. Significantly, neither dephosphorylated Rrn3 nor Rrn3 produced in Escherichia coli can restore transcription by extracts from cycloheximide-treated cells. These results suggest that the phosphorylation state of Rrn3 regulates rDNA transcription by determining the steady-state concentration of the Rrn3.RNA polymerase I complex within the nucleolus.