Several regions of the Saccharomyces cerevisiae genome are subject to position-dependent transcriptional repression mediated by a multi-component nucleosome-binding complex of silent information regulator proteins (Sir2p, Sir3p and Sir4p). These proteins are present in limiting amounts in the nucleus and are targeted to specific chromosomal regions by interaction with sequence-specific DNA-binding factors. Different sites of repression compete for Sir complexes, although it is not known how Sir distribution is regulated. In a screen for factors that interact with Sir4p amino terminus, we have cloned SIF2, which encodes a WD40-repeat-containing factor that disrupts telomeric silencing when overexpressed. In contrast to deletion of SIR4, SIF2 deletion improved telomeric repression, suggesting that under normal conditions Sif2p antagonizes Sir4p function at telomeres. Sif2p overexpression altered the subnuclear localization of Sir4p, but not its protein expression level, suggesting that Sif2p may recruit Sir4p to nontelomeric sites or repression. The sif2 mutant strains were hypersensitive to a range of stress conditions, but did not have decreased viability and did not alter repression in the rDNA. In conclusion, Sif2p resembles the Sir4p regulatory proteins Sir1p and Uth4p in that it competes for the functional assembly of Sir4p at telomeres, yet unlike Sir1p or Uth4p, it does not target Sir4p to either mating-type or rDNA loci.