The packaging of the eukaryotic genome into chromatin is likely to have a profound influence on transcription from the underlying genes. We have previously shown that the disassembly of promoter nucleosomes is obligatory for activation of the yeast PHO5 and PHO8 genes. Here, we show that the PHO5 promoter nucleosomes are reassembled concomitant with transcriptional repression and displacement of the TATA binding protein and RNA polymerase II (RNA Pol II). We identify the histone H3-H4 chaperone Spt6 as the factor that mediates nucleosome reassembly onto the PHO5, PHO8, ADH2, ADY2, and SUC2 promoters during transcriptional repression. Furthermore, promoter nucleosome reassembly is essential for transcriptional repression. In the absence of Spt6-mediated nucleosome reassembly, the activators Pho4 and Pho2 are displaced from the PHO5 promoter in repressing conditions, yet transcription is sustained. As such, these studies demonstrate that activators are not required for transcription in the absence of competing chromatin reassembly.