The relationship between histone acetylation and transcriptional activation at the yeast INO1 gene was addressed. INO1 encodes a key enzyme required for the de novo synthesis of phosphatidylinositol. Induction of INO1 resulted in acetylation of both histones H3 and H4 at the INO1 promoter and sequences farther downstream in the coding region, suggesting a gene-wide acetylation in response to transcriptional activation. Such chromatin remodeling activity requires the presence of transcriptional activator Ino2p. This indicates that histone acetylation is an activator-dependent event. Furthermore, the increase of histone acetylation is due to the increase of acetylation levels per nucleosome rather than the increase of nucleosome density. Therefore, these observations constitute evidence for the molecular mechanism of the correlation between histone acetylation and INO1 activity.