We characterized the organization and expression of PHO5 and PHO3, the tightly linked repressible and constitutive acid phosphatase genes of Saccharomyces cerevisiae. The "constitutive" gene, PHO3, is expressed only when PHO5 is not. Altering PHO5 expression, either through promoter deletions or through mutations in trans-acting regulatory genes, showed that PHO5 expression is sufficient to block transcription of PHO3. An active genomic copy of PHO5 was able to block expression of PHO3 from a high-copy-number plasmid, showing that some trans-acting product of PHO5 is involved. This is probably a translation product, since the presence of a nontranslatable PHO5 RNA did not inhibit transcription of PHO3.