Transcriptional repression at the yeast silent mating type loci requires the formation of a nucleoprotein complex at specific cis-acting elements called silencers, which in turn promotes the binding of a histone-associated Sir-protein complex to adjacent chromatin. A similar mechanism of long-range transcriptional repression appears to function near telomeric repeat sequences, where it has been demonstrated that Sir3p is a limiting factor for the propagation of silencing. A combined immunofluorescence/in situ hybridization method for budding yeast was developed that maintains the three-dimensional structure of the nucleus. In wild-type cells the immunostaining of Sir3p, Sir4p and Rap1 colocalizes with Y' subtelomeric sequences detected by in situ hybridization. All three antigens and the subtelomeric in situ hybridization signals are clustered in foci, which are often adjacent to, but not coincident with, nuclear pores. This colocalization of Rap1, Sir3p and Sir4p with telomeres is lost in sir mutants, and also when Sir4p is overexpressed. To test whether the natural positioning of the two HM loci, located roughly 10 and 25 kb from the ends of chromosome III, is important for silencer function, a reporter gene flanked by wild-type silencer elements was integrated at various internal sites on other yeast chromosomes. We find that integration at internal loci situated far from telomeres abrogates the ability of silencers to repress the reporter gene. Silencing can be restored by creation of a telomere at 13 kb from the reporter construct, or by insertion of 340 bp of yeast telomeric repeat sequence at this site without chromosomal truncation. Elevation of the internal nuclear pools of Sir1p, Sir3p and Sir4p can relieve the lack of repression at the LYS2 locus in an additive manner, suggesting that in wild-type cells silencer function is facilitated by its juxtaposition to a pool of highly concentrated Sir proteins, such as those created by telomere clustering.