The present invention provides molecular switch system methods and compositions for use in regulatable gene expression. The system includes a nucleic acid construct which has a DNA response sequence for a transcriptional regulatory protein operably linked to a promoter, a compound binding sequence in the vicinity of the DNA response sequence, a transgene under the control of the promoter; and a DNA binding compound. In some cases, the molecular switch system further includes a nucleic acid sequence encoding a transcriptional regulatory protein operably linked to a second promoter. The invention further provides a method for screening compounds for the ability to function in the molecular switch system and thereby regulate gene expression.