In eukaryotic cells, the highly conserved FACT (FAcilitates Chromatin Transcription) complex plays important roles in several chromatin-based processes including transcription initiation and elongation. During transcription elongation, the FACT complex interacts directly with nucleosomes to facilitate histone removal upon RNA polymerase II (Pol II) passage and assists in the reconstitution of nucleosomes following Pol II passage. Although the contribution of the FACT complex to the process of transcription elongation has been well established, the mechanisms that govern interactions between FACT and chromatin still remain to be fully elucidated. Using the budding yeast Saccharomyces cerevisiae as a model system, we provide evidence that the middle domain of the FACT subunit Spt16--the Spt16-M domain--is involved in functional interactions with histone H3. Our results show that the Spt16-M domain plays a role in the prevention of cryptic intragenic transcription during transcription elongation and also suggest that the Spt16-M domain has a function in regulating dissociation of Spt16 from chromatin at the end of the transcription process. We also provide evidence for a role for the extreme carboxy terminus of Spt16 in functional interactions with histone H3. Taken together, our studies point to previously undescribed roles for the Spt16 M-domain and extreme carboxy terminus in regulating interactions between Spt16 and chromatin during the process of transcription elongation.