DDI2 and DDI3 (DDI2/3) are two identical genes in Saccharomyces cerevisiae encoding cyanamide (CY) hydratase. They are not only highly induced by CY, but also by a DNA-damaging agent methyl methanesulfonate (MMS), and the regulatory mechanism is unknown. In this study, we performed a modified genome-wide genetic synthetic array screen and identified Fzf1 as a zinc-finger transcriptional activator required for CY/MMS-induced DDI2/3 expression. Fzf1 binds to a DDI2/3 promoter consensus sequence CS2 in vivo and in vitro, and this interaction was enhanced in response to the CY treatment. Indeed, experimental over production of Fzf1 alone was sufficient to induce DDI2/3 expression; however, CY and MMS treatments did not cause the accumulation or apparent alteration in migration of cellular Fzf1. To test a hypothesis that Fzf1 is activated by covalent modification of CY and MMS, we performed mass spectrometry of CY/MMS-treated Fzf1 and detected a few modified lysine residues. Amino acid substitutions of these residues revealed that Fzf1-K70A completely abolished MMS-induced and reduced CY-induced DDI2/3 expression, indicating that the Fzf1-K70 methylation activates Fzf1. This study collectively reveals a novel regulatory mechanism by which Fzf1 is activated by chemical modifications and in turn induces the expression of its target genes for detoxification.