The compaction of DNA into chromatin in the eukaryotic nucleus poses many obstacles to transcription. Individual nucleosomes as well as higher order structures limit access of cis-acting regulatory elements to trans-acting factors. The structural nature of this inhibition and the mechanisms by which chromatin is remodeled to facilitate the regulation of gene expression have remained puzzles for many years. Recent advances highlight the intimate and dynamic interplay between transcription proteins and components of chromatin, providing new clues to long-standing questions. A transcriptional adaptor complex has been discovered to house histone acetylase activity. A chromatin remodeling "machine" has been found to be part of the RNA polymerase II holoenzyme. Identification of new factors that affect the organization of functional chromatin domains in yeast, flies, and mammals provides new insights into the organization of higher order chromatin structures, as well as the nature of boundaries that restrict these domains. These compelling discoveries and others define a new and exciting threshold for our understanding of the many connections between chromatin and transcription.