In Saccharomyces cerevisiae, AMP biosynthesis genes (ADE genes) are transcriptionally activated in the absence of extracellular purines by the Bas1p and Bas2p (Pho2p) transcription factors. We now show that expression of the ADE genes is low in mutant strains affected in the first seven steps of the pathway, while it is constitutively derepressed in mutant strains affected in later steps. Combined with epistasy studies, these results show that 5'-phosphoribosyl-4-succinocarboxamide-5-aminoimidazole (SAICAR), an intermediate metabolite of the pathway, is needed for optimal activation of the ADE genes. Two-hybrid studies establish that SAICAR is required to promote interaction between Bas1p and Bas2p in vivo, while in vitro experiments suggest that the effect of SAICAR on Bas1p-Bas2p interaction could be indirect. Importantly, feedback inhibition by ATP of Ade4p, catalyzing the first step of the pathway, appears to regulate SAICAR synthesis in response to adenine availability. Consistently, both ADE4 dominant mutations and overexpression of wild-type ADE4 lead to deregulation of ADE gene expression. We conclude that efficient transcription of yeast AMP biosynthesis genes requires interaction between Bas1p and Bas2p which is promoted in the presence of a metabolic intermediate whose synthesis is controlled by feedback inhibition of Ade4p acting as the purine nucleotide sensor within the cell.