The Sir2 protein mediates gene silencing and repression of recombination at the rDNA repeats in budding yeast. Here we show that Sir2 executes these functions as a component of a nucleolar complex designated RENT (regulator of nucleolar silencing and telophase exit). Net1, a core subunit of this complex, preferentially cross-links to the rDNA repeats, but not to silent DNA regions near telomeres or to active genes, and tethers the RENT complex to rDNA. Net1 is furthermore required for rDNA silencing and nucleolar integrity. During interphase, Net1 and Sir2 colocalize to a subdomain within the nucleous, but at the end of mitosis a fraction of Sir2 leaves the nucleolus and disperses as foci throughout the nucleus, suggesting that the structure of rDNA silent chromatin changes during the cell cycle. Our findings suggest that a protein complex shown to regulate exit from mitosis is also involved in gene silencing.