Positioning of telomeres at the nuclear periphery can have dramatic effects on gene expression by establishment of heritable, transcriptionally repressive subdomains. However, little is known about the integral membrane proteins that mediate telomere tethering at the nuclear envelope. Here, we find a previously unrecognized function for the Saccharomyces cerevisiae Sad1-UNC-84 domain protein Mps3 in regulating telomere positioning in mitotic cells. Our data demonstrate that the nucleoplasmic N-terminal acidic domain of Mps3 is not essential for viability. However, this acidic domain is necessary and sufficient for telomere tethering during S phase and the silencing of reporter constructs integrated at telomeres. We show that this is caused by the role of the Mps3 acidic domain in binding and localization of the silent information regulator protein Sir4 to the nuclear periphery. Thus, Mps3 functions as an integral membrane anchor for telomeres and is a novel nuclear receptor for the Sir4 pathway of telomere tethering and gene inactivation.