In order to understand how gene regulation is achieved in eukaryotes in response to DNA damage, we used budding yeast as a model lower eukaryotic organism and investigated the molecular events leading to the expression of two closely clustered damage-inducible genes, MAG1 and DDI1. MAG1 and DDI1 are co-activated by a shared 8 bp repeat sequence, UAS(DM). In this study, we screened a yeast genomic library, identified Pdr3 as the transcriptional activator and demonstrated in vivo and in vitro that Pdr3 binds UAS(DM). Pdr3 is required for the activation of a number of genes encoding membrane efflux pumps and deletion of PDR3 results in reduced basal-level expression and loss of DNA damage induction of MAG1 and DDI1. Interestingly, Pdr1, another transcriptional activator homologous to Pdr3 that is also required for the activation of multidrug-resistance genes, is not involved in the regulation of MAG1 and DDI1 expression, although it may also bind to UAS(DM). Deletion of PDR3 does not affect the expression of other well-documented DNA damage-inducible genes; hence, yeast DNA damage-inducible genes appear to have distinct effectors although to a certain extent they share a common regulatory pathway mediated by DNA damage checkpoints.