The late endosome (MVB) plays a key role in coordinating vesicular transport of proteins between the Golgi complex, vacuole/lysosome, and plasma membrane. We found that deleting multiple genes involved in vesicle fusion at the MVB (class C/D vps mutations) impairs transcriptional activation by Gcn4, a global regulator of amino acid biosynthetic genes, by decreasing the ability of chromatin-bound Gcn4 to stimulate preinitiation complex assembly at the promoter. The functions of hybrid activators with Gal4 or VP16 activation domains are diminished in class D mutants as well, suggesting a broader defect in activation. Class E vps mutations, which impair protein sorting at the MVB, also decrease activation by Gcn4, provided they elicit rapid proteolysis of MVB cargo proteins in the aberrant late endosome. By contrast, specifically impairing endocytic trafficking from the plasma membrane, or vesicular transport to the vacuole, has a smaller effect on Gcn4 function. Thus, it appears that decreasing cargo proteins in the MVB through impaired delivery or enhanced degradation, and not merely the failure to transport cargo properly to the vacuole or downregulate plasma membrane proteins by endocytosis, is required to attenuate substantially transcriptional activation by Gcn4.