Abstract: Chz1p is a histone chaperone that interacts physically and functionally with the histone variant Htz1p, which has been implicated in establishing and maintaining boundaries between transcriptionally inactive heterochromatin and active euchromatin. To investigate the role of Chz1p in chromatin organization, we performed genome-wide expression arrays and chromatin immunoprecipitations of SIR complex components and modified histones in a CHZ1 deletion strain. Deletion of CHZ1 led to reduced ubiquitination of subtelomere-associated H2B, reduced subtelomeric H3K79 di-methylation, and increased binding of Sir3p, and Sir4p at telomere-distal euchromatin regions, correlating with decreased gene expression in subtelomeric regions. This anti-silencing defect appears to be mediated by enhanced association of de-ubiquitinase Ubp10p with subtelomeric DNA, as detected by chromatin immunoprecipitation analysis. In support of this, we show that deletion of UBP10 can antagonize the subtelomeric silencing phenotype of Deltachz1. Taken together, the results demonstrate a novel role for Chz1p in epigenetic regulation, through H2B de-ubiquitination by Ubp10p.