The control of gene expression during development, differentiation and maintenance of cellular function is governed by a complex array of transcription factors. We have undertaken a molecular dissection of the regulatory factors that direct transcription of protein coding genes by RNA polymerase II. Our early studies identified sequence-specific transcriptional activators that bind to enhancer and promoter sequences to modulate the transcriptional initiation event. However, the mechanism by which activators enhance transcription and mediate promoter selectivity remained unknown. Combining biochemical purification and in vitro assays, we have recently identified an essential class of transcription factors called TAFs that are tightly associated with the basal factor TBP (TATA-binding protein). We have found that TAFs are responsible for at least two regulatory functions. Some TAFs serve as coactivators capable of binding activators and mediating enhancing function. Other TAFs have been shown to confer template selectivity by binding directly to core DNA elements of the promoter. Thus different subunits of TBP/TAF complexes perform a variety of functions critical for transcriptional regulation in animal cells.