Targeted selection-based genome-editing approaches have enabled many fundamental discoveries and are used routinely with high precision. We found, however, that replacement of with a common selection cassette in budding yeast led to reduced expression and function for the adjacent gene, , despite all coding and regulatory sequences remaining intact. Cassette-induced repression of MRP51 drove all mutant phenotypes detected in cells deleted for . This behavior resembled the 'neighboring gene effect' (NGE), a phenomenon of unknown mechanism whereby cassette insertion at one locus reduces the expression of a neighboring gene. Here, we leveraged strong off-target mutant phenotypes resulting from cassette replacement of to provide mechanistic insight into the NGE. We found that the inherent bidirectionality of promoters, including those in expression cassettes, drives a divergent transcript that represses through combined transcriptional interference and translational repression mediated by production of a long undecoded transcript isoform (LUTI). Divergent transcript production driving this off-target effect is general to yeast expression cassettes and occurs ubiquitously with insertion. Despite this, off-target effects are often naturally prevented by local sequence features, such as those that terminate divergent transcripts between the site of cassette insertion and the neighboring gene. Thus, cassette-induced off-target effects can be eliminated by the insertion of transcription terminator sequences into the cassette, flanking the promoter. Because the driving features of this off-target effect are broadly conserved, our study suggests it should be considered in the design and interpretation of experiments using integrated expression cassettes in other eukaryotic systems, including human cells.