We have analyzed the chromatin structure of a phosphate-repressible acid phosphatase gene (PHO5) within yeast nuclei. Under derepressed conditions (low Pi media), the gene is much more sensitive to either DNAse I or micrococcal nuclease digestion than is the repressed gene. We have mapped DNase I hypersensitive sites unique to the active gene near the 5'-end of the acid phosphatase mRNA and within a region presumed to function in the regulation of the gene by Pi. Although the gene is packaged into regularly spaced nucleosomes, no detectable phase relationship exists between nucleosomes and DNA sequence under derepressed conditions, whereas in the repressed state the nucleosomes occur in one predominant phase. These results demonstrate reversible changes in the chromatin structure of a eukaryotic gene system that directly correlate with the functional state of the gene.