The transposable Ty elements consist of a central core, epsilon, flanked by direct repeats called deltas. In wild-type strains Ty transcripts initiate in one delta and terminate in the other. Insertion mutations caused by Ty elements have a wide variety of phenotypes, ranging from inhibition of gene expression to constitutive gene expression. Mutations in the SPT3 gene suppress these effects of Ty and delta insertion mutations on adjacent genes. In spt3 null mutants the Ty transcription pattern for the entire ensemble of Ty elements is changed. The delta-delta transcripts are absent and initiation begins at a position 800 bp into the epsilon region. In these spt3 strains, transcription that initiates in solo deltas and proceeds into adjacent structural genes is also abolished. The requirement of SPT3 for normal transcription from delta can explain the ability of spt3 mutations to suppress the mutations caused by Ty and delta insertions. In SPT3 strains transcription from the delta into adjacent sequences interferes with normal expression of those sequences, whereas in spt3 strains the aberrant transcript is not made. spt3 mutations also lead to defects in diploid formation and sporulation, suggesting that SPT3 is important for the expression of genes in addition to Ty elements.