Abstract: The Set3 histone deacetylase complex (Set3C) binds histone H3 dimethylated at lysine 4 (H3K4me2) to mediate deacetylation of histones in 5'-transcribed regions. To discern how Set3C affects gene expression, genome-wide transcription was analyzed in yeast undergoing a series of carbon source shifts. Deleting SET3 primarily caused changes during transition periods, as genes were induced or repressed. Surprisingly, a majority of Set3-affected genes are overlapped by noncoding RNA (ncRNA) transcription. Many Set3-repressed genes have H3K4me2 instead of me3 over promoter regions, due to either reduced H3K4me3 or ncRNA transcription from distal or antisense promoters. Set3C also represses internal cryptic promoters, but in different regions of genes than the Set2/Rpd3S pathway. Finally, Set3C stimulates some genes by repressing an overlapping antagonistic antisense transcript. These results show that overlapping noncoding transcription can fine-tune gene expression, not via the ncRNA but by depositing H3K4me2 to recruit the Set3C deacetylase.