Spt2/Sin1 is a DNA binding protein with HMG-like domains that has been suggested to play a role in chromatin-mediated transcription in Saccharomyces cerevisiae. Previous studies have suggested models in which Spt2 plays an inhibitory role in the initiation of transcription of certain genes. In this work, we have taken several approaches to study Spt2 in greater detail. Our results have identified previously unknown genetic interactions between spt2⌬ and mutations in genes encoding transcription elongation factors, including members of the PAF and HIR/HPC complexes. In addition, genome-wide and gene-specific chromatin immunoprecipitation analyses suggest that Spt2 is primarily associated with coding regions in a transcriptiondependent fashion. Furthermore, our results show that Spt2, like other elongation factors, is required for the repression of transcription from a cryptic promoter within a coding region and that Spt2 is also required for repression of recombination within transcribed regions. Finally, we provide evidence that Spt2 plays a role in regulating the levels of histone H3 over transcribed regions. Taken together, our results suggest a direct link for Spt2 with transcription elongation, chromatin dynamics, and genome stability.The regulation of chromatin structure in eukaryotes is a fundamental aspect of all DNA-related processes in vivo, including transcription, replication, recombination, repair, and chromosome segregation. The basic unit of chromatin is the nucleosome, consisting of 146 bp of DNA wrapped around an octamer of histones (28). In addition to histones, several nonhistone proteins play important roles in chromatin structure and chromatin-related processes (67).One such nonhistone component of chromatin in Saccharomyces cerevisiae is the HMG-like protein Spt2/Sin1. Spt2 was initially identified genetically, by mutations (called spt2) that suppress Ty and ␦ insertion mutations in the HIS4 promoter (69) and by mutations (called sin1) that suppress the loss of the Swi/Snf chromatin-remodeling complex for expression of an HO-lacZ fusion (58). Mutations in SPT2 have since been shown to be pleiotropic, suppressing initiation defects caused by mutations that abolish Swi/Snf (46) or the SAGA components Gcn5 and Ada3 (44,46) and by deletion mutations in RPB1 that shorten the Rpb1 carboxy-terminal domain (45). In addition, spt2 mutations have been shown to allow increased expression of the SSA3 gene in an ssa1 ssa2 mutant background (4). While these strong mutant phenotypes suggested a negative role for Spt2 in transcription initiation, very little is actually understood concerning the function of Spt2 with respect to chromatin structure and transcription. Interestingly, while several studies show that an spt2⌬ mutation affects expression of an HO-lacZ fusion (44,46,58), there is no effect of spt2⌬ on transcription of HO itself (74). The finding that spt2 mutations impair chromosome segregation (23) also suggested a broad role in chromatin function.Analysis of the Spt2 amino acid sequence has reve...