Previous work has suggested that products of the Saccharomyces cerevisiae Silent Information Regulator (SIR) genes form a complex with histones, nucleated by cis-acting silencers or telomeres, which represses transcription in a position-dependent but sequence-independent fashion. While it is generally thought that this Sir complex works through the establishment of heterochromatin, it is unclear how this structure blocks transcription while remaining fully permissive to other genetic processes such as recombination or integration. Here we examine the molecular determinants underlying the silencing of HSP82, a transcriptionally potent, stress-inducible gene. We find that HSP82 is efficiently silenced in a SIR-dependent fashion, but only when HMRE mating-type silencers are configured both 5' and 3' of the gene. Accompanying dominant repression are novel wrapped chromatin structures within both core and upstream promoter regions. Strikingly, DNase I footprints mapping to the binding sites for heat shock factor (HSF) and TATA-binding protein (TBP) are strengthened and broadened, while groove-specific interactions, as detected by dimethyl sulfate, are diminished. Our data are consistent with a model for SIR repression whereby transcriptional activators gain access to their cognate sites but are rendered unproductive by a co-existing heterochromatic complex.