The Kcnq1ot1 antisense noncoding RNA has been implicated in long-range bidirectional silencing, but the underlying mechanisms remain enigmatic. Here we characterize a domain at the 5' end of the Kcnq1ot1 RNA that carries out transcriptional silencing of linked genes using an episomal vector system. The bidirectional silencing property of Kcnq1ot1 maps to a highly conserved repeat motif within the silencing domain, which directs transcriptional silencing by interaction with chromatin, resulting in histone H3 lysine 9 trimethylation. Intriguingly, the silencing domain is also required to target the episomal vector to the perinucleolar compartment during mid-S phase. Collectively, our data unfold a novel mechanism by which an antisense RNA mediates transcriptional gene silencing of chromosomal domains by targeting them to distinct nuclear compartments known to be rich in heterochromatic machinery.