Transcription of non-protein-coding DNA (ncDNA) and its noncoding RNA (ncRNA) products are beginning to emerge as key regulators of gene expression. We previously identified a regulatory system in Saccharomyces cerevisiae whereby transcription of intergenic ncDNA (SRG1) represses transcription of an adjacent protein-coding gene (SER3) through transcription interference. We now provide evidence that SRG1 transcription causes repression of SER3 by directing a high level of nucleosomes over SRG1, which overlaps the SER3 promoter. Repression by SRG1 transcription is dependent on the Spt6 and Spt16 transcription elongation factors. Significantly, spt6 and spt16 mutations reduce nucleosome levels over the SER3 promoter without reducing intergenic SRG1 transcription, strongly suggesting that nucleosome levels, not transcription levels, cause SER3 repression. Finally, we show that spt6 and spt16 mutations allow transcription factor access to the SER3 promoter. Our results raise the possibility that transcription of ncDNA may contribute to nucleosome positioning on a genome-wide scale where, in some cases, it negatively impacts protein-DNA interactions.