Here we show that the Ino80 chromatin remodeling complex (Ino80C) directly prevents euchromatin from invading transcriptionally silent chromatin within intergenic regions and at the border of euchromatin and heterochromatin. Deletion of Ino80C subunits leads to increased H3K79 methylation and noncoding RNA polymerase II (Pol II) transcription centered at the Ino80C-binding sites. The effect of Ino80C is direct, as it blocks H3K79 methylation by Dot1 in vitro. Heterochromatin stimulates the binding of Ino80C in vitro and in vivo. Our data reveal that Ino80C serves as a general silencing complex that restricts transcription to gene units in euchromatin.