In the yeast Saccharomyces cerevisiae, IRE1 encodes a bifunctional protein with transmembrane kinase and endoribonuclease activities. HAC1 encodes a transcription factor which has a basic leucine zipper domain. Both gene products play a crucial role in the unfolded protein response. Mutants in which one of these genes is defective also show the inositol-auxotrophic (Ino(-)) phenotype, but the reason for this has not been clear. To investigate the mechanism underlying the Ino(-) phenotype, we screened a multicopy suppressor gene which can suppress the Ino(-) phenotype of the Delta hac1 strain. We obtained a truncated form of the ITC1 gene that has a defect in its 3' region. Although the truncated form of ITC1 clearly suppressed the Ino(-) phenotype of the Delta hac1 strain, the full-length ITC1 had a moderate effect. The gene products of ITC1 and ISW2 are known to constitute a chromatin-remodeling complex (T. Tsukiyama, J. Palmer, C. C. Landel, J. Shiloach, and C. Wu, Genes Dev. 13:686--697, 1999). Surprisingly, the deletion of either ITC1 or ISW2 in the Delta hac1 strain circumvented the inositol requirement and caused derepression of INO1 even under repression conditions, i.e., in inositol-containing medium. These data indicate that the Isw2p-Itc1p complex usually represses INO1 expression and that overexpression of the truncated form of ITC1 functions in a dominant negative manner in INO1 repression. It is conceivable that the repressor function of this complex is regulated by the C-terminal region of Itc1p.