We have described and cloned previously a factor (MTF-1) that binds specifically to heavy metal-responsive DNA sequence elements in the enhancer/promoter region of metallothionein genes. MTF-1 is a protein of 72.5 kDa that contains six zinc fingers and multiple domains for transcriptional activation. Here we report the disruption of both alleles of the MTF-1 gene in mouse embryonic stem cells by homologous recombination. The resulting null mutant cell line fails to produce detectable amounts of MTF-1. Moreover, due to the loss of MTF-1, the endogenous metallothionein I and II genes are silent, indicating that MTF-1 is required for both their basal and zinc-induced transcription. In addition to zinc, other heavy metals, including cadmium, copper, nickel and lead, also fail to activate metal-responsive promoters in null mutant cells. However, cotransfection of an MTF-1 expression vector and metal-responsive reporter genes yields strong basal transcription that can be further boosted by zinc treatment of cells. These results demonstrate that MTF-1 is essential for metallothionein gene regulation. Finally, we present evidence that MTF-1 itself is a zinc sensor, which exhibits increased DNA binding activity upon zinc treatment.