The genome is nonrandomly organized within the nucleus, but it remains unclear how gene position affects gene expression. Silenced genes have frequently been found associated with the nuclear periphery, and the environment at the periphery is believed to be refractory to transcriptional activation. However, in budding yeast, several highly regulated classes of genes, including the GAL7-10-1 gene cluster, are known to translocate to the nuclear periphery concurrent with their activation. To investigate the role of gene positioning on GAL gene expression, we monitored the effects of mutations that disrupt the interaction between the GAL locus and the periphery or synthetically tethered the locus to the periphery. Localization to the nuclear periphery was found to dampen initial GAL gene induction and was required for rapid repression after gene inactivation, revealing a function for the nuclear periphery in repressing endogenous GAL gene expression. Our results do not support a gene-gating model in which GAL gene interaction with the nuclear pore ensures rapid gene expression, but instead they suggest that a repressive environment at the nuclear periphery establishes a negative feedback loop that enables the GAL locus to respond rapidly to changes in environmental conditions.