Spt2/Sin1 is a DNA binding protein with HMG-like domains that has been suggested to play a role in chromatin-mediated transcription in Saccharomyces cerevisiae. Previous studies have suggested models in which Spt2 plays an inhibitory role in the initiation of transcription of certain genes. In this work, we have taken several approaches to study Spt2 in greater detail. Our results have identified previously unknown genetic interactions between spt2Delta and mutations in genes encoding transcription elongation factors, including members of the PAF and HIR/HPC complexes. In addition, genome-wide and gene-specific chromatin immunoprecipitation analyses suggest that Spt2 is primarily associated with coding regions in a transcription-dependent fashion. Furthermore, our results show that Spt2, like other elongation factors, is required for the repression of transcription from a cryptic promoter within a coding region and that Spt2 is also required for repression of recombination within transcribed regions. Finally, we provide evidence that Spt2 plays a role in regulating the levels of histone H3 over transcribed regions. Taken together, our results suggest a direct link for Spt2 with transcription elongation, chromatin dynamics, and genome stability.