Transcriptional silencing involves the formation of specialized repressive chromatin structures. Previous studies have shown that the histone H3-H4 chaperone known as chromatin assembly factor 1 (CAF-1) contributes to transcriptional silencing in yeast, although the molecular basis for this was unknown. In this work we have identified mutations in the nonconserved C terminus of antisilencing function 1 (Asf1) that result in enhanced silencing of HMR and telomere-proximal reporters, overcoming the requirement for CAF-1 in transcriptional silencing. We show that CAF-1 mutants have a drastic reduction in DNA-bound histone H3 levels, resulting in reduced recruitment of Sir2 and Sir4 to the silent loci. C-terminal mutants of another histone H3-H4 chaperone Asf1 restore the H3 levels and Sir protein recruitment to the silent loci in CAF-1 mutants, probably as a consequence of the weakened interaction between these Asf1 mutants and histone H3. As such, these studies have identified the nature of the molecular defect in the silent chromatin structure that results from inactivation of the histone chaperone CAF-1.