The Saccharomyces cerevisiae Sir2 protein is an NAD+-dependent histone deacetylase that plays a critical role in transcriptional silencing, genome stability, and longevity. A human homologue of Sir2, SIRT1, regulates the activity of the p53 tumor suppressor and inhibits apoptosis. The Sir2 deacetylation reaction generates two products: O-acetyl-ADP-ribose and nicotinamide, a precursor of nicotinic acid and a form of niacin/vitamin B3. We show here that nicotinamide strongly inhibits yeast silencing, increases rDNA recombination, and shortens replicative life span to that of a sir2 mutant. Nicotinamide abolishes silencing and leads to an eventual delocalization of Sir2 even in G1-arrested cells, demonstrating that silent heterochromatin requires continual Sir2 activity. We show that physiological concentrations of nicotinamide noncompetitively inhibit both Sir2 and SIRT1 in vitro. The degree of inhibition by nicotinamide (IC50 < 50 μM) is equal to or better than the most effective known synthetic inhibitors of this class of proteins. We propose a model whereby nicotinamide inhibits deacetylation by binding to a conserved pocket adjacent to NAD+, thereby blocking NAD+ hydrolysis. We discuss the possibility that nicotinamide is a physiologically relevant regulator of Sir2 enzymes.