The Saccharomyces cerevisiae gene deletion collection is widely used for functional gene annotation and genetic interaction analyses. However, the standard G418-resistance cassette used to produce knockout mutants delivers strong regulatory elements into the target genetic loci. To date, its side effects on the expression of neighboring genes have never been systematically assessed. Here, using ribosome profiling data, RT-qPCR, and reporter expression, we investigated perturbations induced by the KanMX module. Our analysis revealed significant alterations in the transcription efficiency of neighboring genes and, more importantly, severe impairment of their mRNA translation, leading to changes in protein abundance. In the 'head-to-head' orientation of the deleted and neighboring genes, knockout often led to a shift of the transcription start site of the latter, introducing new uAUG codon(s) into the expanded 5' untranslated region (5' UTR). In the 'tail-to-tail' arrangement, knockout led to activation of alternative polyadenylation signals in the neighboring gene, thus altering its 3' UTR. These events may explain the so-called neighboring gene effect (NGE), i.e. false genetic interactions of the deleted genes. We estimate that in as much as ∼1/5 of knockout strains the expression of neighboring genes may be substantially (>2-fold) deregulated at the level of translation.