By the use of an artificial gene coding for rRNA (rDNA gene), we found that transcription of the major precursor rRNA in Saccharomyces cerevisiae cells is stimulated 15-fold by a positive control element located 2 kilobases upstream of the transcription initiation site. Analysis of in vitro runon transcripts suggests that this promoter element increases the frequency of initiation by RNA polymerase I molecules. A 190-base-pair fragment encompassing the promoter element can stimulate transcription on a centromere plasmid in either orientation, upstream or downstream of the transcription initiation site, suggesting that it is an enhancer element. Integration of artificial rDNA genes into a nonribosomal locus in the genome demonstrates that the rDNA enhancer functions either 5' or 3' to an rRNA transcription unit, suggesting it may operate in both directions within the rDNA tandem array. This is the first observation in S. cerevisiae of the stimulation of transcription by an element placed downstream. Finally, enhancer activity is dependent upon sequences that lie at both boundaries of the 190-base-pair fragment. In particular, a 5-base-pair deletion at the extreme 3' boundary of the 190-base-pair fragment greatly reduces the activation of transcription and implicates a set of inverted repeats.