The Sir3 protein helps form telomeric heterochromatin by interacting with hypoacetylated histone H4 lysine 16 (H4–Lys16). The molecular nature of the heterochromatin boundary is still unknown. Here we show that the MYST-like acetyltransferase Sas2p is required for the acetylation (Ac) of H4–Lys16 in euchromatin. In a sas2Δ strain or a phenocopy Lys16Arg mutant, Sir3p spreads from roughly 3 kb to roughly 15 kb, causing hypoacetylation and repression of adjacent chromatin. We also found that disruption of Sir3p binding in a deacetylase-deficient Sir 2Δ strain can be suppressed by sas2Δ. These data indicate that opposing effects of Sir2p and Sas2p on acetylation of H4–Lys16 maintain the boundary at telomeric heterochromatin.