It is an important and difficult task to extract gene network information from high-throughput genomic data. A common approach is to cluster genes using pairwise correlation as a distance metric. However, pairwise correlation is clearly too simplistic to describe the complex relationships among real genes since co-expression relationships are often restricted to a specific set of biological conditions/processes. In this study, we described a three-way gene interaction model that captures the dynamic nature of co-expression relationship between a gene pair through the introduction of a controller gene.