Recent studies have revealed that transcription of noncoding, intergenic DNA is abundant among eukaryotes. However, the functions of this transcription are poorly understood. We have previously shown that in Saccharomyces cerevisiae, expression of an intergenic transcript, SRG1, represses the transcription of the adjacent gene, SER3, by transcription interference. We now show that SRG1 transcription is regulated by serine, thereby conferring regulation of SER3, a serine biosynthetic gene. This regulation requires Cha4, a serine-dependent activator that binds to the SRG1 promoter and is required for SRG1 induction in the presence of serine. Furthermore, two coactivator complexes, SAGA and Swi/Snf, are also directly required for activation of SRG1 and transcription interference of SER3. Taken together, our results elucidate a physiological role for intergenic transcription in the regulation of SER3. Moreover, our results demonstrate a mechanism by which intergenic transcription allows activators to act indirectly as repressors.