The silent information regulator 2/3/4 (Sir2/3/4) complex is required for gene silencing at the silent mating-type loci and at telomeres in Saccharomyces cerevisiae. Sir3 is closely related to the origin recognition complex 1 subunit and consists of an N-terminal bromo-adjacent homology (BAH) domain and a C-terminal AAA(+) ATPase-like domain. Here, through a combination of structure biology and exhaustive mutagenesis, we identified unusual, silencing-specific features of the AAA(+) domain of Sir3. Structural analysis of the putative nucleotide-binding pocket in this domain reveals a shallow groove that would preclude nucleotide binding. Mutation of this site has little effect on Sir3 function in vivo. In contrast, several surface regions are shown to be necessary for the Sir3 silencing function. Interestingly, the Sir3 AAA(+) domain is shown here to bind chromatin in vitro in a manner sensitive to histone H3K79 methylation. Moreover, an exposed loop on the surface of this Sir3 domain is found to interact with Sir4. In summary, the unique folding of this conserved Sir3 AAA(+) domain generates novel surface regions that mediate Sir3-Sir4 and Sir3-nucleosome interactions, both being required for the proper assembly of heterochromatin in living cells.