A key feature of interphase chromosomes is their compaction into discrete “territories” in the nucleus. In this review, we focus on the compartmentalization of the genome conferred by this organization and evaluate our current understanding of the role of large-scale chromatin folding in the regulation of gene expression. We examine evidence for the hypothesis that transcription occurs at the external surfaces of chromosomes and follow its evolution to include transcription at the surfaces of chromatin-rich domains within chromosomes. We also present prevailing views regarding the details of large-scale chromatin folding and the functional relationship between chromatin and the enigmatic nuclear matrix.