Transcriptional silencing is a phenomenon in which the transcription of a gene by RNA polymerase II or III is repressed or not, dependent only on the gene's chromosomal location. Two prevailing models exist for silencing: (1) steric hindrance in silenced chromatin inhibits the binding of upstream activator proteins or polymerase or (2) silencing primarily blocks steps downstream of transcription preinitiation complex formation. Here, we test these models quantitatively for the case of SIR2-dependent silencing in budding yeast, using foreign and endogenous reporter proteins, at transgenic and endogenous loci. Our results contradict both models and show instead that transcriptional silencing at several URA3 transgenes, and at the naturally silenced endogenous HMRa and HMLalpha mating type genes, acts downstream of gene activator protein binding to strongly reduce the occupancy of TFIIB, RNA polymerase II, and TFIIE at the silenced promoters.