A protein responsible for enhanced transcription by RNA polymerase III was identified in extracts from Xenopus oocytes. This protein, called EP3, interacts with a specific DNA sequence adjacent to the 3'-end of a Xenopus somatic 5S RNA gene and forms a distinct band shift complex with a unique DNase I footprint. Enhanced transcription was observed from both 5S RNA and tRNA reporter genes when EP3 binding sites were inserted at different locations and orientations. Removal of the EP3 protein from an oocyte extract abolished this enhanced transcription. In addition, EP3 was shown to stimulate transcription by increasing the rate of transcription complex assembly. EP3 directly discriminates between the somatic and oocyte 5S RNA gene families and may play a significant role in their differential expression during early Xenopus development.