A 2-bp insertion between the -10 and -35 regions of the pRE promoter of bacteriophage lambda reverses the effect of the activator protein, CII, on transcription from pRE in vitro. The mutant promoter is weakly constitutive in the absence of cII protein and repressed in its presence. This is in sharp contrast to wild-type pRE which is inactive in the absence of cII protein and stimulated at least 1000-fold in its presence (Shih and Gussin, 1984a; McClure and Hoopes, 1985). These effects are explained by the creation of a new -35 region with weak homology to the -35 consensus sequence for Escherichia coli promoters, and by the altered spatial relationship between the -35 region and the CII-binding site. This interpretation was confirmed by analysis of double mutants containing known cy (pRE) mutations together with the 2-bp insertion. Insertion of 4 bp or deletion of 2 bp completely inactivates pRE in the presence or absence of cII protein, again indicating that activation is dependent upon proper spacing between the -35 region and the transcription start point.