Primary gene induction or repression in eukaryotes does not require de novo protein synthesis, suggesting the involvement of posttranslational modifications. Since many different types of stimuli that affect gene expression also lead to the activation of protein kinases, it is likely that transcription factor function will be directly regulated by phosphorylation. Even though other types of posttranslational modifications will undoubtedly be important in regulating transcription factor function, this review is strictly focused on the role of phosphorylation, since this is the best studied modification system (for other recent reviews see Bohmann, 1990; Jackson, 1992). Three main levels of regulation modulate transcription factor activity (see Table 1). First, transcription factors can be sequestered in the cytoplasm and rendered inactive through lack of access to their target sequences. Phosphorylation of the factor itself or a cytoplasmic anchor protein allows translocation of the transcription factor into the nucleus, where it acts (Figure 1). Second, the DNA binding activity of nuclear transcription factors can be modulated by phosphorylation either positively or negatively (Figure 2). Third, phosphorylation can affect the interaction of transcription factor transactivation domains with the transcriptional machinery (Figure 3). These possibilities are by no means mutually exclusive, and in principle phosphorylation at multiple sites by different protein kinases can result in regulation at several distinct levels. Three-dimensional structural analysis has shown that phosphorylation can affect protein activity by inducing allosteric conformational changes (Sprang et al., 1988) as well as by electrostatic repulsive effects (Hurley et al., 1990) and these mechanisms are both likely to be important in regulating transcription factor function.