In the Saccharomyces cerevisiae pheromone-response pathway, the transcription factor Ste12 is inhibited by two mitogen-activated protein (MAP)-kinase-responsive regulators, Dig1 and Dig2. These two related proteins bind to distinct regions of Ste12 but are redundant in their inhibition of Ste12-dependent gene expression. Here we describe three functions for Dig1 that are non-redundant with those of Dig2. First, the removal of Dig1 results in a specific increase in intrinsic and extrinsic noise in the transcriptional outputs of the mating pathway. Second, in dig1Δ cells, Ste12 relocalizes from the nucleoplasmic distribution seen in wild-type cells into discrete subnuclear foci. Third, genome-wide insertional chromatin immunoprecipitation studies revealed that Ste12-dependent genes have increased interchromosomal interactions in dig1Δ cells. These findings suggest that the regulation of gene expression through long-range gene interactions, a widely observed phenomenon, comes at the cost of increased noise. Consequently, cells may have evolved mechanisms to suppress noise by controlling these interactions.