Mating pheromone represses synthesis of full-length PRY3 mRNA, and a new transcript appears simultaneously with its 5' terminus 452 nucleotides inside the open reading frame (ORF). Synthesis of this shorter transcript results from activation of a promoter within the PRY3 locus, and its production is concomitant with the rapid disappearance of the full-length transcript. Evidence is consistent with the pheromone-induced transcription factor Ste12p binding two pheromone response elements within the PRY3 promoter, directly impeding transcription of the full-length mRNA while simultaneously inducing initiation of the short transcript. This process depends on a TATA box within the PRY3 ORF. Expression of full-length PRY3 inhibited mating, while no disadvantage was detectable for cells unable to make the short transcript. Therefore, Ste12p is utilized as a repressor of full-length PRY3 transcription, ensuring efficient mating. There is no evidence that production of the short PRY3 transcript is anything more than an adventitious by-product of this mechanism. It is possible that cryptic binding sites for transcriptional activators may occur frequently within genomes and have the potential of evolving for rapid, gene-specific repression by mechanisms analogous to PRY3. PRY3 regulation provides a model for the coordination of both inductive and repressive activities within a regulatory network.