Transcriptional gene silencing (TGS) is the mechanism generally thought by which heterochromatin effects silencing. However, recent discovery in fission yeast of a cis-acting posttranscriptional gene-silencing (cis-PTGS) pathway operated by the RNAi machinery at heterochromatin challenges the role of TGS in heterochromatic silencing. Here, we describe a multienzyme effector complex (termed SHREC) that mediates heterochromatic TGS in fission yeast. SHREC consists of a core quartet of proteins - Clr1, Clr2, Clr3, and Mit1 - which distribute throughout all major heterochromatin domains to effect TGS via distinct activities associated with the histone deacetylase Clr3 and the SNF2 chromatin-remodeling factor homolog Mit1. SHREC is also recruited to the telomeres by multiple independent mechanisms involving telomere binding protein Ccq1 cooperating with Taz1 and the RNAi machinery, and to euchromatic sites, via mechanism(s) distinct from its heterochromatin localization aided by Swi6/HP1. Our analyses suggest that SHREC regulates nucleosome positioning to assemble higher-order chromatin structures critical for heterochromatin functions.