Rapid induction of the Drosophila melanogaster heat shock gene hsp70 is achieved through the binding of heat shock factor (HSF) to heat shock elements (HSEs) located upstream of the transcription start site (reviewed in ref. ). The subsequent recruitment of several other factors^,,,,, including Spt5, Spt6 and FACT, is believed to facilitate Pol II elongation through nucleosomes downstream of the start site^,,. Here, we report a novel mechanism of heat shock gene regulation that involves modifications of nucleosomes by the TAC1 histone modification complex. After heat stress, TAC1 is recruited to several heat shock gene loci, where its components are required for high levels of gene expression. Recruitment of TAC1 to the 5′-coding region of hsp70 seems to involve the elongating Pol II complex. TAC1 has both histone H3 Lys 4-specific (H3-K4) methyltransferase (HMTase) activity and histone acetyltransferase activity through Trithorax (Trx) and CREB-binding protein (CBP), respectively. Consistently, TAC1 is required for methylation and acetylation of nucleosomal histones in the 5′-coding region of hsp70 after induction, suggesting an unexpected role for TAC1 during transcriptional elongation.