DNA binding transcriptional activators play a central role in gene-selective regulation. In part, this is mediated by targeting local covalent modifications of histone tails. Transcriptional regulation has also been associated with the positioning of genes within the nucleus. We have now examined the role of a transcriptional activator in regulating the positioning of target genes. This was carried out with primary beta-cells and hepatocytes freshly isolated from mice lacking Hnf1alpha, an activator encoded by the most frequently mutated gene in human monogenic diabetes (MODY3). We show that in Hnf1a-/- cells inactive endogenous Hnf1alpha-target genes exhibit increased trimethylated histone H3-Lys27 and reduced methylated H3-Lys4. Inactive Hnf1alpha-targets in Hnf1a-/- cells are also preferentially located in peripheral subnuclear domains enriched in trimethylated H3-Lys27, whereas active targets in wild-type cells are positioned in more central domains enriched in methylated H3-Lys4 and RNA polymerase II. We demonstrate that this differential positioning involves the decondensation of target chromatin, and show that it is spatially restricted rather than a reflection of non-specific changes in the nuclear organization of Hnf1a-deficient cells. This study, therefore, provides genetic evidence that a single transcriptional activator can influence the subnuclear location of its endogenous genomic targets in primary cells, and links activator-dependent changes in local chromatin structure to the spatial organization of the genome. We have also revealed a defect in subnuclear gene positioning in a model of a human transcription factor disease.