Exposure to metals elicits a wide range of adverse effects including cancer, renal failure, neurological disorders, pulmonary fibrosis, and liver damage in animals and humans. Mammalian cells respond to metal challenges by eliminating the metals, antagonizing their effects, and repairing damaged tissues. The metal-activated transcription factor 1 (MTF1) mediates the induction of metallothioneins (MT1 and 2) and other protective proteins/enzymes in response to toxic metals. The mechanism of MTF1 activation by metals has not been well understood. We analyzed the interaction between arsenic (As) and MTF1 for Mt1 induction. Arsenic potently induces Mt1 mRNA expression in many mammalian cells. Induction is dependent upon functional MTF1 as induction is lost in Mtf1 knockout (KO) cells but is restored upon reconstitution with Mtf1. Induction requires the binding of MTF1 to the metal response elements of endogenous Mt1. Induction is markedly enhanced by cycloheximide. Phenylarsine oxide (PAO), which covalently binds to vicinal protein cysteine thiol groups, induces Mt1 with a magnitude of higher potency than that of arsenic. PAO affinity beads effectively pulls down the carboxyl half of MTF1 (MTF1321-675) by binding to a cluster of five cysteine residues near the terminus. Preincubation with As, Cd, Co, Ni, Ag, Hg, and Bi blocks pull-down of MTF1321-675 by PAO beads in vitro and in vivo, indicating binding of the metal inducers to the same C-terminal cysteine cluster as PAO. Finally, deletion of the cysteine cluster or mutation of the cysteine residues abolishes or markedly reduces the transcription activation activity of MTF1 and the ability of MTF1 to restore Mt1 induction in Mtf1 KO cells. Our findings demonstrate that the C-terminal cysteine cluster of MTF1 plays a critical role in metal sensing, activation of MTF1, and transcription of Mt1 through metal-cysteine thiol interaction.