It is generally believed that silent chromatin is condensed and transcriptionally active chromatin is decondensed. However, little is known about the relationship between the condensation levels and gene expression. Here we report the condensation levels of interphase chromatin in the fission yeast Schizosaccharomyces pombe examined by super-resolution fluorescence microscopy. Unexpectedly, silent chromatin is less condensed than the euchromatin. Furthermore, the telomeric silent regions are flanked by highly condensed chromatin bodies, or 'knobs'. Knob regions span ∼50 kb of sequence devoid of methylated histones. Knob condensation is independent of HP1 homologue Swi6 and other gene silencing factors. Disruption of methylation at lysine 36 of histone H3 (H3K36) eliminates knob formation and gene repression at the subtelomeric and adjacent knob regions. Thus, epigenetic marks at H3K36 play crucial roles in the formation of a unique chromatin structure and in gene regulation at those regions in S. pombe.