The tandem array of ribosomal DNA (rDNA) in Saccharomyces cerevisiae is subjected to transcriptional silencing of RNA polymerase II-transcribed genes. This form of silencing depends on SIR2 and has been tightly linked to the suppression of rDNA recombination and the control of cellular lifespan. Paradoxically, rDNA silencing takes place in the context of an extremely high rate of RNA polymerase I transcription. Because rDNA silencing requires different factors than HMR and telomere silencing, the chromatin structure and the mechanisms of silencing must be fundamentally different. Here we show that yeast condensin organizes the specialized topology of rDNA chromatin. We then demonstrate that this function is necessary for maintaining the correct balance of telomeric and nucleolar Sir2p. Condensin mutants relocalize telomeric Sir2p to rDNA and show histone hyperacetylation at telomeres. Our data reveal the implication of yeast condensin in the arrangement of rDNA repeats into a heterochromatic-like structure that is important for the correct delineation of silencing domains in the nucleus.