The yeast SIR2 gene and many of its homologs have been identified as NAD+-dependent histone deacetylases. To get a broader view of the relationship between the histone deacetylase activity of Sir2p and its in vivo functions we have mutated eight highly conserved residues in the core domain of SIR2. These mutations have a range of effects on the ability of Sir2p to deacetylate histones in vitro and to silence genes at the telomeres and HM loci. Interestingly, there is not a direct correlation between the in vitro and in vivo effects in some of these mutations. We also show that the histone deacetylase activity of Sir2p is necessary for the proper localiztion of the SIR complex to the telomeres.