The Set3 histone deacetylase complex (Set3C) binds histone H3 dimethylated at 
lysine 4 (H3K4me2) to mediate deacetylation of histones in 5'-transcribed 
regions. To discern how Set3C affects gene expression, genome-wide transcription 
was analyzed in yeast undergoing a series of carbon source shifts. Deleting SET3 
primarily caused changes during transition periods, as genes were induced or 
repressed. Surprisingly, a majority of Set3-affected genes are overlapped by 
noncoding RNA (ncRNA) transcription. Many Set3-repressed genes have H3K4me2 
instead of me3 over promoter regions, due to either reduced H3K4me3 or ncRNA 
transcription from distal or antisense promoters. Set3C also represses internal 
cryptic promoters, but in different regions of genes than the Set2/Rpd3S 
pathway. Finally, Set3C stimulates some genes by repressing an overlapping 
antagonistic antisense transcript. These results show that overlapping noncoding 
transcription can fine-tune gene expression, not via the ncRNA but by depositing 
H3K4me2 to recruit the Set3C deacetylase.