Elevations in gene dosage of the transcriptional regulatory protein yAP-1 in Saccharomyces cerevisiae can elicit pronounced phenotypic increases in tolerance of a variety of drugs including the toxic heavy metal cadmium. While a large elevation in cadmium tolerance occurs in response to overproduction of yAP-1, the target genes under yAP-1 control have not yet been identified that are responsible for this increase. We show here that the YCF1 gene, encoding a likely integral membrane protein, is required for yAP-1 to exert its normal effects on cadmium tolerance. Mutant strains of yeast that lack the YCF1 gene are hypersensitive to cadmium and this hypersensitivity is epistatic to yAP-1 overexpression. YCF1 mRNA levels and the expression of a YCF1-lacZ reporter construct positively correlates with changes in YAP1 gene dosage. A set of 5' truncation derivatives of the YCF1-lacZ fusion gene identified the region from -201 to +47 as being sufficient for the yAP-1-dependent increase in expression. DNase I footprinting using a probe from this segment of the YCF1 promoter showed that bacterially-produced yAP-1 protein was capable of binding a novel DNA element we have designated the yAP-1 response element. Insertion of the yAP-1 response element upstream of a CYC1-lacZ gene fusion led to the production of beta-galactosidase in a yAP-1-dependent fashion. These data establish that an important physiological target of yAP-1 transcriptional regulation is the YCF1 structural gene.