TELOMERIC genes and the HM loci in Saccharomyces cerevisiae are transcriptionally repressed and adopt a heterochromatin-like structure(1,2). The trans-acting factors RAP1, SIR3 and SIR4 are required for telomeric and HM silencing(3-5) : and are thought to be chromosomal(6-8), but how they contribute to histone-dependent repression of adjacent chromatin(9-11) is unclear. SIR3 suppresses silencing defects in histones(10), is limiting for silencing adjacent to telomeres(12), and interacts with the H3 and H4 amino termini in vitro(13), Here we show that SIR3 co-immunoprecipitates SIR4, RAP1 and histones from cellular extracts, suggesting the presence of large chromatin-associated protein complexes. Crosslinking experiments show that SIR3 is present at HMRa, HML alpha and telomeres in vivo, and that it spreads from telomeric regions into adjacent chromatin when overexpressed. Thus SIR3 is a structural component of yeast heterochromatin, repressing adjacent genes as it spreads along the chromosome.