Abstract Transcription of nonprotein-coding DNA is widespread in eukaryotes and plays important regulatory roles for many genes, including genes that are misregulated in cancer cells. Its pervasiveness presents the potential for a wealth of diverse regulatory roles for noncoding transcription. We previously showed that the act of transcribing noncoding DNA (ncDNA) across the promoter of the protein-coding SER3 gene in Saccharomyces cerevisiae positions nucleosomes over the upstream activating sequences, leading to strong repression of SER3 transcription. To explore the possibility of other regulatory roles for ncDNA transcription, we selected six candidate S. cerevisiae genes that express ncRNAs over their promoters and analyzed the regulation of one of these genes, ECM3, in detail. Because noncoding transcription can lead to changes in the local chromatin landscape that impinge on the expression of nearby coding genes, we surveyed the effects of various chromatin regulators on the expression of ECM3. These analyses identified roles for the Paf1 complex in positively regulating ECM3 transcription through methylation of histone H3 at lysine 4 (K4) and for Paf1 in controlling the pattern of intergenic transcription at this locus. By deleting a putative promoter for the noncoding transcription unit that lies upstream of ECM3, we provide evidence for a positive correlation between intergenic transcription and ECM3 expression. Our results are consistent with a model in which cotranscriptional methylation of histone H3 K4, mediated by the Paf1 complex and noncoding transcription, leads to activation of ECM3 transcription.