The Ty5 retrotransposons of Saccharomyces cerevisiae integrate preferentially into regions of silent chromatin at the telomeres and silent mating loci (HMR and HML). We define a Ty5-encoded targeting domain that spans 6 amino acid residues near the C terminus of integrase (LXSSXP). The targeting domain establishes silent chromatin when it is tethered to a weakened HMR-E silencer, and it disrupts telomeric silencing when it is overexpressed. As determined by both yeast two-hybrid and in vitro binding assays, the targeting domain interacts with the C terminus of Sir4p, a structural component of silent chromatin. This interaction is abrogated by mutations in the targeting domain that disrupt integration into silent chromatin, suggesting that recognition of Sir4p by the targeting domain is the primary determinant in Ty5 target specificity.