In a screen for cell cycle-regulated genes in the yeast Saccharomyces cerevisiae, we have identified a gene, EGT2, which is involved in cell separation in the G1 stage of the cell cycle. Transcription of EGT2 is tightly regulated in a cell cycle-dependent manner. Transcriptional levels peak at the boundary of mitosis and early G1 The transcription factors responsible for EGT2 expression in early G1 are Swi5 and, to a lesser extent, Ace2. Swi5 is involved in the transcriptional activation of the HO gene during late G1 and early S phase, and Ace2 induces CTS1 transcription during early and late G1 We show that Swi5 activates EGT2 transcription as soon as it enters the nucleus at the end of mitosis in a concentration-dependent manner. Since Swi5 is unstable in the nucleus, its level drops rapidly, causing termination of EGT2 transcription before cells are committed to the next cell cycle. However, Swi5 is still able to activate transcription of HO in late G1 in conjunction with additional activators such as Swi4 and Swi6.