The Ty1 retrotransposon harbors a DNA region that performs dual functions as both a gene silencing and chromatin insulator.

In various eukaryotic kingdoms, long terminal repeat (LTR) retrotransposons repress transcription by infiltrating heterochromatin generated within their elements. In contrast, the budding yeast LTR retrotransposon Ty1 does not itself undergo transcriptional repression, although it is capable of repressing the transcription of the inserted genes within it. In this study, we identified a DNA region within Ty1 that exerts its silencing effect via sequence orientation. We identified a DNA region within the Ty1 group-specific antigen (GAG) gene that causes gene silencing, termed GAG silencing (GAGsi), in which the silent chromatin in the GAGsi region is created by euchromatin-specific histone modifications. A characteristic inverted repeat (IR) sequence is present at the 5' end of this region, forming a chromatin boundary between promoter-specific chromatin upstream of the IR sequence and silent chromatin downstream of the IR sequence. In addition, Esc2 and Rad57, which are involved in DNA repair, were required for GAGsi silencing. Finally, the chromatin boundary was required for the transcription of Ty1 itself. Thus, the GAGsi sequence contributes to the creation of a chromatin environment that promotes Ty1 transcription.