We demonstrate using a dinucleosome template that acetylation of the core histones enhances transcription by RNA polymerase III. This effect is not dependent on an increased mobility of the core histone octamer with respect to DNA sequence. When linker histone is subsequently bound, we find both a reduction in nucleosome mobility and a repression of transcription. These effects of linker histone binding are independent of core histone acetylation, indicating that core histone acetylation does not prevent linker histone binding and the concomitant transcriptional repression. These studies are complemented by the use of a Xenopus egg extract competent both for chromatin assembly on replicating DNA and for RNA polymerase III transcription. Incorporation of acetylated histones and lack of linker histones together facilitate transcription by >10-fold in this system; however, they have little independent effect on transcription. Thus core histone acetylation significantly facilitates transcription, but this effect is inhibited by the assembly of linker histones into chromatin.