Repair of DNA damage in gene promoters is slower than in actively transcribed genes. Persistent damage in gene promoters though transient can have significant biological effects on regulated gene expression. In this study we investigated the effect of ultraviolet radiation on gene promoter-associated functions when DNA damage is located within and outside transcription factor binding sites. Our results show that both cyclobutane pyrimidine dimers and (6-4) photoproducts inhibit DNA–protein interaction, in vitro transcript production and transactivation of reporter genes. The biological significance of transient DNA damage as a mechanism in carcinogenesis is discussed.