DNA-dependent protein kinase represses RNA polymerase I (Pol I) transcription in vitro. To investigate the mechanism underlying transcriptional repression, we compared Pol I transcription in extracts from cells that either contain or lack the catalytic subunit of DNA-PK (DNA-PKcs). ATP-dependent repression of Pol I transcription was observed in extracts from DNA-PKcs-containing but not -deficient cells, required templates with free DNA ends, and was overcome by exogenous SL1, the factor that nucleates initiation complex formation. Order-of-addition experiments demonstrate that DNA-PKcs does not inactivate component(s) of the Poll transcription machinery. Instead, phosphorylated Ku protein competes with SL1 for binding to the rDNA promoter and, as a consequence, prevents initiation complex formation. The results reveal a novel mechanism of transcriptional regulation by DNA-PK. Once targeted to DNA, autophosphorylated Ku may displace positive- or negative-acting factors from their target sites, thereby repressing or activating transcription in a gene-specific manner.