In Saccharomyces cerevisiae, efficient silencer function requires telomere proximity, i.e. compartments of the nucleoplasm enriched in silencing factors. Accordingly, silencers located far from telomeres function inefficiently. We show here that cells lacking yKu balance between two mitotically stable states of silencing competence. In one, a partial delocalization of telomeres and silencing factors throughout the nucleoplasm correlates with enhanced silencing at a non-telomeric locus, while in the other, telomeres retain their focal pattern of distribution and there is no repression at the non-telomeric locus, as observed in wild-type cells. The two states also differ in their level of residual telomeric silencing. These findings indicate the existence of a yKu-independent pathway of telomere clustering and Sir localization. Interestingly, this pathway appears to be under epigenetic control.