Transposons are mobile genetic elements that are an important source of genetic variation and are useful tools for genome engineering, mutagenesis screens, and vectors for transgenesis including gene therapy. We have used second-generation sequencing to analyze ≈2 × 10(5) unique de novo transposon insertion sites of the transposon Hermes in the Saccharomyces cerevisiae genome from both in vitro transposition reactions by using purified yeast genomic DNA, to better characterize intrinsic sequence specificity, and sites recovered from in vivo transposition events, to characterize the effect of intracellular factors such as chromatin on target site selection. We find that Hermes transposon targeting in vivo is profoundly affected by chromatin structure: The subset of genome-wide target sites used in vivo is strongly associated (P < 2e-16 by Fisher's exact test) with nucleosome-free chromatin. Our characterization of the insertion site preferences of Hermes not only assists in the future use of this transposon as a molecular biology tool but also establishes methods to more fully determine targeting mechanisms of other transposons. We have also discovered a long-range sequence motif that defines S. cerevisiae nucleosome-free regions.