Histone modifiers play essential roles in controlling transcription and organizing eukaryotic genomes into functional domains. Here, we show that Set1, the catalytic subunit of the highly conserved Set1C/COMPASS complex responsible for histone H3K4 methylation (H3K4me), behaves as a repressor of the transcriptome largely independent of Set1C and H3K4me in the fission yeast Schizosaccharomyces pombe. Intriguingly, while Set1 is enriched at highly expressed and repressed loci, Set1 binding levels do not generally correlate with the levels of transcription. We show that Set1 is recruited by the ATF/CREB homolog Atf1 to heterochromatic loci and promoters of stress-response genes. Moreover, we demonstrate that Set1 coordinates with the class II histone deacetylase Clr3 in heterochromatin assembly at prominent chromosomal landmarks and repression of the transcriptome that includes Tf2 retrotransposons, noncoding RNAs, and regulators of development and stress-responses. Our study delineates a molecular framework for elucidating the functional links between transcriptome control and chromatin organization. 