In budding yeast genes integrated near telomeres succumb to a variegated pattern of gene repression that requires the silent information regulatory proteins Sir2p, Sir3p and Sir4p, which form a nucleosome-binding complex. Immunolocalization shows that the Sir proteins co-localize with the telomeric repeat binding protein Rap1p and with telomeric DNA in a limited number of foci near the periphery of interphase nuclei. All conditions tested so far that disrupt telomere proximal repression result in a dispersed staining pattern for Sir2p, Sir3p and Sir4p. Although the focal organization is clearly not sufficient for establishing repression, genetic studies suggest that the high local concentration of Sir proteins at telomeric foci facilitates the formation of repressed chromatin. In addition to its telomeric localization, Sir2p is shown by immunostaining and cross-linking to bind a subdomain of the nucleolus. In strains lacking an intact Sir4p, Sir3p also becomes concentrated in the nucleolus by a pathway requiring SIR2 and UTH4. This unexpected localization correlates with observed effects of sir mutations on rDNA stability and longevity, defining a new site of action for silent information regulatory factors. We report a novel WD40 repeat-containing factor, Sif2p, that binds specifically to the Sir4p N-terminus. Like Sir1p and Uth4p, Sif2p antagonizes telomeric silencing by regulating an equilibrium between alternative assembly pathways at different subnuclear loci.