The transcriptional response to environmental changes has to be prompt but appropriate. Previously, it has been shown that the Gis1 transcription factor is responsible for regulating the expression of postdiauxic shift genes in response to nutrient starvation, and this transcription regulation is dependent upon the Rim15 kinase. Here we demonstrate that the activity of Gis1 is negatively modulated by proteasome-mediated limited proteolysis. Limited degradation of Gis1 by the proteasome leads to the production of smaller variants, which have weaker transcription activities than the full-length protein. The coiled-coil domain, absent from the smaller variants, is part of the second transcription activation domain in Gis1 and is essential for both the limited proteolysis of Gis1 and its full activity. Endogenous Gis1 and its variants, regardless of their transcription capabilities, activate transcription in a Rim15-dependent manner. However, when the full-length Gis1 accumulates in cells due to overexpression or inhibition of the proteasome function, transcription activation by Gis1 is no longer solely controlled by Rim15. Together, these data strongly indicate that the function of the limited degradation is to ensure that Gis1-dependent transcription is strictly regulated by the Rim15 kinase. Furthermore, we have revealed that the kinase activity of Rim15 is essential for this regulation.