We have described and cloned previously a factor (MTF‐1) that binds specifically to heavy metal‐responsive DNA sequence elements in the enhancer/promoter region of metallothionein genes. MTF‐1 is a protein of 72.5 kDa that contains six zinc fingers and multiple domains for transcriptional activation. Here we report the disruption of both alleles of the MTF‐1 gene in mouse embryonic stem cells by homologous recombination. The resulting null mutant cell line fails to produce detectable amounts of MTF‐1. Moreover, due to the loss of MTF‐1, the endogenous metallothionein I and II genes are silent, indicating that MTF‐1 is required for both their basal and zinc‐induced transcription. In addition to zinc, other heavy metals, including cadmium, copper, nickel and lead, also fail to activate metal‐responsive promoters in null mutant cells. However, cotransfection of an MTF‐1 expression vector and metal‐responsive reporter genes yields strong basal transcription that can be further boosted by zinc treatment of cells. These results demonstrate that MTF‐1 is essential for metallothionein gene regulation. Finally, we present evidence that MTF‐1 itself is a zinc sensor, which exhibits increased DNA binding activity upon zinc treatment.