Transcription initiation in the eukaryotic cell is a complex process which requires multiple protein-DNA and protein-protein contacts to be established. In addition, the access of transcription factors to DNA is obscured by chromatin whose repressive effects can be overcome by chromatin modifying or remodeling enzymes. The incorporation of these enzymes into multisubunit complexes leads to the important questions what roles other components of the complexes might play and whether these complexes are changing in response to different stimuli. Both issues have been addressed in this study focused on the yeast SAGA complex. SAGA is a 1.8 MDa yeast protein complex composed of several distinct classes of transcription-related factors, including the adaptor/histone acetyltransferase Gcn5, Spt proteins, a subset of TafIIs and the ATM and DNA-PK-related Tra1 protein. Yeast SAGA satisfies the definition of a typical coactivator complex, because it can interact both with acidic activators and with at least one general transcription factor, TBP. Most of the information about SAGA functions was obtained in in vitro experiments. In this study, in vivo functions of SAGA have been investigated. First, the roles of different SAGA subunits at endogenous yeast promoters have been examined. Mutations that completely disrupt SAGA (deletions of SPT7or SPT20) strongly reduce transcriptional activation of a number of genes suggesting that the complex integrity is important for transcriptional regulation. HAT activity of Gcn5 is required for SAGA coactivator function, as well as for normal start site selection at HIS3 promoter. Surprisingly, mutations in Spt proteins involved in SAGA/TBP interaction (Spt3 and Spt8) cause derepression of HIS3 and TRP3 transcription in the uninduced state. Consistent with this, wild-type SAGA inhibits TBP binding to the HIS3 promoter in vitro while SAGA lacking Spt3 or Spt8 is not inhibitory. Thus, different SAGA components have distinct roles in transcriptional regulation, both stimulatory and inhibitory. The second major finding of this study is that a distinct form of SAGA has been detected upon induction of a particular pathway in which its activity is required. This novel complex contains electrophoretically altered Spt7 subunit and lacks two proteins, Spt8 and Sin4, that can both function as transcriptional inhibitors. Thus, SAGA appears to function in the fine tuning of transcription at specific promoters and its subunit composition might be dynamic, changing under different physiological conditions. Structural changes in SAGA may represent a paradigm for the regulation of multisubunit chromatin-modifying complexes