Cac1p is a subunit of yeast chromatin assembly factor I (yCAF-I) that is thought to assemble nucleosomes containing diacetylated histones onto newly replicated DNA [Kaufman, P. D., Kobayashi, R. & Stillman, B. (1997) Genes Dev. 11, 345-357]. Although cac1 delta cells could establish and maintain transcriptional repression at telomeres, they displayed a reduced heritability of the repressed state. Single-cell analysis revealed that individual cac1 delta cells switch from transcriptionally "off" to transcriptionally "on" more often per cell cycle than wild-type cells. In addition, cac1 delta cells were defective for transcriptional silencing near internal tracts of C(1-3)A sequence, but they showed no defect in silencing at the silent mating type loci when analyzed by a reverse transcription-PCR assay. Despite the loss of transcriptional silencing at telomeres and internal C(1-3)A tracts, subtelomeric DNA was organized into nucleosomes that had all of the features characteristic of silent chromatin, such as hypoacetylation of histone H4 and protection from methylation by the Escherichia coli dam methylase. Thus, these features of silent chromatin are not sufficient for stable maintenance of a silent chromatin state. We propose that the inheritance of the transcriptionally repressed state requires the specific pattern of histone acetylation conferred by yCAF-I-mediated nucleosome assembly.