Nucleosome core particles in eukaryotes are linked by a stretch of DNA that is usually associated with a linker histone. Here, we show in yeast, that the presence of yeast linker histone Hho1p represses expression of a pol II transcribed gene (MET15) embedded in the rDNA. In vivo deletions of Hho1p sequences showed that the second globular domain is sufficient for that repression, whereas the presence of the N terminus is required for its derepression. In contrast, a run-on assay confirmed by a ChIP experiment showed that Hho1p is required for maximal pol I processivity during rDNA transcription. Psoralen accessibility experiments indicated that Hho1p is necessary for normal rDNA compaction. DNA array expression analysis comparing RNA transcripts in wild-type and hho1 strains before and after a heat-shock showed that Hho1p is necessary to achieve wild-type mRNA levels of transcripts that encode ribosomal components. Taken together, our results suggest that Hho1p is involved in rDNA compaction, and like core histones, is required for efficient rDNA transcription by pol I.