In Saccharomyces cerevisiae, TRK1 and TRK2 encode the high- and low-affinity K⁺ transporters, respectively. In cells containing a deletion of TRK1, transcription levels of TRK2 are extremely low and are limiting for growth in media containing low levels of K⁺ (Trk^– phenotype). Recessive mutations in RPD1 and RPD3 suppress the Trk^– phenotype of trk1∆ cells. We show here that rpd3 mutations derepress TRK2, conferring an approximately fourfold increase in transcription. rpd3 mutations confer pleiotropic phenotypes, including (i) mating defects, (ii) hypersensitivity to cycloheximide, (in) inability to sporulate as homozygous diploids, and (iv) constitutive derepression of acid phosphatase. RPD3 was cloned and is predicted to encode a 48-kDa protein with no extensive similarity to proteins contained in current data bases. Deletion of RPD3 is not lethal but confers phenotypes identical to those caused by spontaneous mutations. RPD3 is required for both full repression and full activation of transcription of target genes including PH05, STE6, and TY2. RPD3 is the second gene required for this function, since RPD1 is also required. The effects of mutations in RPD1 and RPD3 are not additive, suggesting that these genes are involved in the same transcriptional regulatory function or pathway.