We have investigated transcriptional interactions between the GAL10 and GAL7 genes of Saccharomyces cerevisiae. Both genes are part of the galactose (GAL) gene cluster which is transcriptionally activated to high levels in the presence of galactose. Since GAL7 is positioned downstream of GAL10 and both genes are expressed co-ordinately at high levels, the possibility that GAL10 transcription influences GAL7 was analysed. Using transcriptional run-on assays, we show that high levels of polymerase are found in the 600 bp GAL10-7 intergenic region that accumulate over the GAL7 promoter. Furthermore, GAL7 transcription is enhanced when the GAL10 upstream activating sequence (UASG) is deleted, indicating that interference between GAL10 and GAL7 is likely to occur in the chromosomal locus. Deletions in the GAL10 poly(A) signal result in complete inactivation of the GAL7 promoter and cause a dramatic increase in bi-cistronic GAL10-7 mRNA, predominantly utilizing the downstream, GAL7 poly(A) site. These data demonstrate a pivotal role for the GAL10 poly(A) site in allowing the simultaneous expression of GAL10 and GAL7. In effect, this RNA processing signal has a direct influence on both transcriptional termination and initiation.