Gene looping juxtaposes the promoter and terminator regions of RNA polymerase 
II-transcribed genes in yeast and mammalian cells. Here we report an 
activator-dependent interaction of transcription initiation and termination 
factors during gene looping in budding yeast. Chromatin analysis revealed that 
MET16, INO1, and GAL1p-BUD3 are in a stable looped configuration during 
activated transcription. Looping was nearly abolished in the absence of 
transcription activators Met28, Ino2, and Gal4 of MET16, INO1, and GAL1p-BUD3 
genes, respectively. The activator-independent increase in transcription was not 
accompanied by loop formation, thereby suggesting an essential role for 
activators in gene looping. The activators did not facilitate loop formation 
directly because they did not exhibit an interaction with the 3' end of the 
genes. Instead, activators physically interacted with the general transcription 
factor TFIIB when the genes were activated and in a looped configuration. TFIIB 
cross-linked to both the promoter and the terminator regions during the 
transcriptionally activated state of a gene. The presence of TFIIB on the 
terminator was dependent on the Rna15 component of CF1 3' end processing 
complex. Coimmunoprecipitation revealed a physical interaction of Rna15 with 
TFIIB. We propose that the activators facilitate gene looping through their 
interaction with TFIIB during transcriptional activation of genes.