To understand the principles of control and selectivity in gene expression, the biochemical mechanisms by which promoter- and enhancer-binding factors regulate transcription by RNA polymerase II were analyzed. A general observed repressor of transcription was purified and identified as histone H-1. Since many aspects of H-1 binding to naked DNA resemble its interaction with chromatin, purified H-1 bound to naked DNA was used as a model for the repressed state of the DNA template. Three sequence-specific transcription factors, Spl, GAL4-VP16, and GAGA factor, were shown to counteract H-1-mediated repression (antirepression). In addition, Spl and GAL4-VP16, but not the GAGA factor, activated transcription in the absence of H-1. Therefore, true activation and antirepression appear to be distinct activities of sequence-specific factors. Furthermore, transcription antirepression by GAL4-VP16 was sustained for several rounds of transcription. These findings, together with previous studies on H-1, suggest that H-1 participates in repression of the genome in the ground state and that sequence-specific transcription factors induce selected genes by a combination of true activation and release of basal repression that is mediated at least in part by H-1.