Rtt106 is a histone chaperone that has been suggested to play a role in heterochromatin-mediated silencing in Saccharomyces cerevisiae. It interacts physically and functionally with the chromatin assembly factor-1 (CAF-1), which is associated with replication-coupled nucleosomal deposition. In this work, we have taken several approaches to study Rtt106 in greater detail and have identified a previously unknown function of Rtt106. We found genetic interactions between rtt106Delta and mutations in genes encoding transcription elongation factors, including Spt6, TFIIS, and members of the PAF and yeast DSIF complexes. In addition, chromatin immunoprecipitation analysis indicates that Rtt106 is associated with transcribed regions of active genes. Furthermore, our results show that Rtt106 is required for the repression of transcription from a cryptic promoter within a coding region. This observation strongly suggests that Rtt106 is involved in the regulation of chromatin structure of transcribed regions. Finally, we provide evidence that Rtt106 plays a role in regulating the levels of histone H3 transcription-coupled deposition over transcribed regions. Taken together, our results indicate a direct link for Rtt106 with transcription elongation and the chromatin dynamics associated with RNA polymerase II passage.