Transcriptional silencing in Saccharomyces cerevisiae involves the assembly of a heterochromatic domain that is heritable from generation to generation. To maintain the silenced state, the propagation of silent heterochromatin must be coordinated with the events of chromosome duplication and segregation. Here we present an in vivo analysis of the cell-cycle events required for the establishment of the silenced state at the HMR silent mating-type locus. We show that Sir protein recruitment to and spreading from the HMRE silencer is poor during S phase, but is robust during G2 and subsequent phases. Despite abundant Sir protein association in cells arrested in G2/M phase, silencing is not fully established by this stage of the cell cycle. Rather, robust silencing is not observed until telophase. Interestingly, the elimination of the cohesin subunit Scc1/Mcd1p allows the full establishment of silencing to occur in G2/M phase. Furthermore, expression of a noncleavable allele of Scc1/Mcd1p inhibits the establishment of silencing. Our findings reveal both S- and M-phase requirements for the establishment of silencing and implicate the loss of sister-chromatid cohesion as a critical event in this process.