The region between the open reading frames of the adjacent yeast genes ARO4 and HIS7 consists of 417 base pairs (bp). Termination of ARO4 transcription and initiation of HIS7 transcription has to take place within this interval, because both genes are transcribed into the same direction. We show that the ARO4 terminator and the HIS7 promoter are spatially separated, nonoverlapping units. The ARO4 terminator includes 84 bp of the ARO4 3'-untranslated region with several redundant ARO4 3' end processing signals. Deletion of the ARO4 terminator does reduce but not completely shut down its expression. The adjacent region of 40 bp is neither required for correct ARO4 3' end formation nor for HIS7 initiation but contains the nucleotides corresponding to the wild type mRNA 3' ends. The following 280 bp are required for the HIS7 promoter. Replacement of the housekeeping ARO4 promoter by the stronger ACT1 promoter leads to reduced HIS7 expression due to transcriptional interference. This underlines the compactness of the yeast genome carrying virtually no intergenic regions between adjacent genes.