Abstract: The establishment of transcriptional silencing in Saccharomyces cerevisiae requires progression through the cell cycle. We have previously found that transit through M-phase is necessary and sufficient to establish silencing at telomeres following induction of the Sir3 silencing factor. In this study we find that halting cell cycle progression in either G1 or at the beginning of M-phase limits the ability of Sir3 to associate with a telomere-linked reporter gene, and prevents the changes in histone modifications associated with gene repression. Deletion of genes coding for the histone variant H2A.Z (Htz1 in yeast) and histone acetyltransferase Sas2 abolish the cell cycle progression requirement for the establishment of silencing. Cells blocked in telophase (but not at metaphase) are also able to establish silencing. We show that H2A.Z binds to the promoter of our telomere-linked reporter gene, and that this binding diminishes in silenced cells. Finally, we observe a specific displacement of H2A.Z from chromatin in telophase-blocked cells, regardless of the silencing status of the reporter gene. These results suggest that the requirement for M-phase in the establishment of silencing may reflect a cell cycle regulated relaxation of heterochromatin barriers.