The 26S proteasome degrades denatured proteins and other proteins targeted for destruction by covalent modification. Here we show that impaired proteasome function influences the transcription of numerous yeast genes. Of 6144 genes present on the macroarray filters used in this study, approximately 5% showed measurable mRNA decreases and 2% showed mRNA increases following 30 min of proteasome inhibition. Northern blot hybridization shows that this response is time- and dose-dependent and occurs with either pharmacological or genetic impairment of the proteasome. A number of splicing factors possess the PEST motif found in certain proteasome substrates. However, mRNA levels drop with proteasome inhibition without obvious increases in intron-bearing pre-mRNA, indicating that splicing is not generally impaired when proteome activity is blocked. Chimeric gene constructs, nuclear run-on experiments, and transcriptional inhibition studies show that for members of three functional groups (i.e., ribosomal protein genes, histone genes, and heat shock protein genes) changes in mRNA levels occur largely by transcriptional modulation. In addition, these studies reveal a possible new means of modulating kinetochore levels through CEP3 expression. Together these data strongly support the view that proteasome activity plays a significant role in the regulation of eukaryotic gene expression.