A screen for host mutations which increase the rate of transposition of Ty1 and Ty2 into a chromosomal target was used to identify factors influencing retroelement transposition. The fortuitous presence of a mutation in the CAC3 gene in the strain in which this screen was undertaken enabled us to discover that double mutaions of cac3 and hir3, but neither of the two single mutations, caused a dramatic increase in the rate of retrotransposition. We further showed that this effect was not due to an increase in the overall level of Ty1 mRNA. Two subtle cac3 phenotypes, slight methyl methanesulfonate (MMS) sensitivity and reduction of telomeric silencing, were significantly enhanced in the cac3 hir3 double mutant. In addition, the growth rate of the double mutant was reduced. HIR3 belongs to a class of HIR genes that regulate the transcription of histones, while Cac3p, together with Cac1p and Cac2p, forms chromatin assembly factor I. Other combinations of mutations in cac and hir genes (cac3 hir1, cac3 hir2, and cac2 hir3) also increase Ty transposition and MMS sensitivity and reduce the growth rate. A model explaining the synergistic interaction between cac and hir mutations in terms of alterations in chromatin structure is proposed.