BIOCHEMICAL and genetic studies suggest the existence of mediators that work between the activation domains (ADs) of regulatory proteins and the basic transcriptional machinery. We have previously shown genetically that Sug1 interacts with the AD of the yeast activator Ga14(1). Here we provide evidence that the Sug1 protein of yeast binds directly to the ADs of Ga14 and the viral activator, VP16. Sug1 protein is associated with the TATA-binding protein in vivo and binds to it in vitro, consistent with a mediator function. We also demonstrate that Sug1 is not a component of the 26S proteasome, contrary to previous reports(2-5). Sug1 is a member of a large, highly conserved family of ATPases, implying a role for ATP hydrolysis in the activation of transcription.