Chromosome I from the yeast Saccharomyces cerevisiae contains a DNA molecule of approximately 231 kbp and is the smallest naturally occurring functional eukaryotic nuclear chromosome so far characterized. The nucleotide sequence of this chromosome has been determined as part of an international collaboration to sequence the entire yeast genome. The chromosome contains 89 open reading frames and 4 tRNA genes. The central 165 kbp of the chromosome resembles other large sequenced regions of the yeast genome in both its high density and distribution of genes. In contrast, the remaining sequences flanking this DNA that comprise the two ends of the chromosome and make up more than 25% of the DNA molecule have a much lower gene density, are largely not transcribed, contain no genes essential for vegetative growth, and contain several apparent pseudogenes and a 15-kbp redundant sequence. These terminally repetitive regions consist of a telomeric repeat called W', flanked by DNA closely related to the yeast FLO1 gene. The low gene density, presence of pseudogenes, and lack of expression are consistent with the idea that these terminal regions represent the yeast equivalent of heterochromatin. The occurrence of such a high proportion of DNA with so little information suggests that its presence gives this chromosome the critical length required for proper function.