We developed a genetic selection system based on nonsense suppression in Saccharomyces cerevisiae to identify mutations in proteins involved in transcription initiation by RNA polymerase III. A SUP4 tRNA(Tyr) internal promoter mutation (A53T61) that was unable to suppress ochre mutations in vivo and was incapable of binding TFIIIC in vitro was used as the target for selection of trans-acting compensatory mutations. We identified two such mutations in the same gene, which we named TAP1 (for transcription activation protein). The level of the SUP4A53T61 transcript was threefold higher in the tap1-1 mutant than in the wild type. The tap1-1 mutant strain was also temperature sensitive for growth. The thermosensitive character cosegregated with the restorer of suppression activity, as shown by meiotic linkage analysis and coreversion of the two traits. At 1 to 2 h after a shift to the restrictive temperature, RNA synthesis was strongly inhibited in the tap1-1 mutant, preceding any effect upon protein synthesis or growth. A marked decrease in tRNA and 5S rRNA synthesis was seen, and shortly after that, rRNA synthesis was inhibited. By complementation of the ts- growth defect, we cloned the wild-type TAP1 gene. It is essential for yeast growth. We show in the accompanying report (T. L. Aldrich, G. Di Segni, B. L. McConaughy, N. J. Keen, S. Whelen, and B. D. Hall, Mol. Cell. Biol. 13:3434-3444, 1993) that TAP1 is identical to RAT1, a yeast gene implicated in poly(A)+ RNA export and that the TAP1/RAT1 gene product has extensive sequence similarity to the protein encoded by another yeast gene (variously named DST2, KEM1, RAR5, SEP1, or XRN1) having exonuclease and DNA strand transfer activity (reviewed by Kearsey and Kipling [Trends Cell Biol. 1:110-112, 1991]).