Chromatin plays a dynamic role in regulating gene transcription. Regulation of accessibility of DNA template is mediated in part by nucleosome occupancy such that nucleosomes are relatively depleted upstream of genes and relatively enriched in the coding regions. One of the factors that influence this differential nucleosome occupancy is histone post translational modifications. One such modification is dimethylation of histone H3 at Lysine 36 (H3K36me2). It is mediated by Set2, a histone methyl transferase (HMT) in yeast which had been shown to associate with RNA polymerase II (RNA pol-II) during transcription elongation at individual loci. To study the role of Set2 in gene regulation, I sought to determine the genome wide localization of H3K36me2. Using chromatin immunoprecipitation followed by DNA microarray hybridization (ChIP-chip), we show that H3K36me2 is predominantly localized to RNA pol-II transcribed regions and is depleted in the regulatory (promoter) regions genome-wide. Mating loci, telomeres, RNA pol-III transcribed regions have scarce or low levels of H3K36me2. H3K36me2 modification begins within RNA pol-II transcribed ORFs at approximately same location, independent of the length of the ORF. This further confirms that Set2 associates with RNA pol-II after the initiation phase of transcription. Levels of H3K36me2 do not correlate with the transcriptional frequencies of genes. However, genes that are transcribed at some detectably level tend to have higher levels of H3K36me2 than genes that are completely repressed. H3K36me2 therefore acts as a mark that demarcates coding and regulatory regions. The function of such a mark became clear with the finding by other groups that localization of Set2 and H3K36me2 at coding regions was essential for maintaining the fidelity of transcriptional initiation. Absence of Set2 leads to hyperacetylation in the coding regions and, as a consequence, aberrant initiation events. My studies show that H3K36me2 is a chromatin mark that demarcates functionally distinct regions of the genome by marking the coding regions specifically. Studies by others show that this localization of H3K36me2 is important for maintaining proper chromatin structure. H3 Lysine 36 is also acetylated and ChIP-chip analysis showed that H3K36ac is enriched in the promoter regions in the entire yeast genome. The function of H3K36ac is not yet known but it is possible that one way H3K36me2 is restricted to the coding regions by acetylating this residue in the regulatory regions. Another way organisms demarcate specific functional boundaries is by restricting tri methyl Lysine 4 at histone H3 (H3K4me3) to the 5' end of coding regions. Ctk1, a kinase that has been shown to phosphorylate Serine 2 of C-terminal domain (CTD) of RNA pol-II was shown to regulate the levels of H3K4me3. Ctk1 is required for the recruitment of Set2 to RNA pol-II. My genome wide studies show that absence of Ctk1 causes spreading of H3K4me3 into the 3' region of ORFs globally resulting in disruption of chromatin structure within the ORFs and occurrence of aberrant transcription initiation. These studies show that specific histone modification patterns are important for maintaining chromatin structure. Organisms have developed multiple mechanisms to ensure proper localization of these modifications disruption of which could cause disturbances in transcriptional programs.