Abscisic acid (ABA) induces genes that are highly expressed during late embryogenesis, but suppresses gibberellin (GA)-responsive genes essential for seed germination and seedling growth. Promoter elements necessary and sufficient for ABA up- and down-regulation of gene expression have been previously defined in barley aleurone layers. We have studied the effect of a protein phosphatase 2C, ABI1, an ABA-inducible protein kinase, PKABA1, and a transcription factor, VP1, on ABA action in a barley aleurone transient expression system. The observations have allowed us to dissect ABA signal transduction pathways leading to either induction or suppression of gene expression. The ABA induction of embryogenesis genes is highly inhibited in the presence of a mutated protein phosphatase 2C, encoded by the abi1-1 dominant mutant gene that is known to block ABA responses in Arabidopsis. However, the abi1-1 gene product has no effect on the ABA suppression of a GA-responsive alpha-amylase gene. On the other hand, PKABA1 suppresses the expression of alpha-amylase genes, but has little effect on ABA up-regulated genes. Therefore, it appears that ABA induction and suppression follow two separate signal transduction pathways with the former inhibited by ABI1 and the latter modulated by PKABA1. The presence of VP1 enhances the ABA induction of late embryogenesis genes, but also suppresses germination specific genes. A schematic model based on these observations is presented to explain the effect of these regulatory proteins on ABA-mediated gene expression.