Regulation of rDNA transcription depends on the formation and dissociation of a functional complex between RNA polymerase I (pol I) and transcription initiation factor Rrn3p. We analyzed whether phosphorylation is involved in this molecular switch. Rrn3p is a phosphoprotein that is predominantly phosphorylated in vivo when it is not bound to pol I. In vitro, Rrn3p is able both to associate with pol I and to enter the transcription cycle in its nonphosphorylated form. By contrast, phosphorylation of pol I is required to form a stable pol I-Rrn3p complex for efficient transcription initiation. Furthermore, association of pol I with Rrn3p correlates with a change in the phosphorylation state of pol I in vivo. We suggest that phosphorylation at specific sites of pol I is a prerequisite for proper transcription initiation and that phosphorylation/dephosphorylation of pol I is one possibility to modulate cellular rDNA transcription activity.