Dynamic access to genetic information is central to organismal development and environmental response. Consequently, genomic processes must be regulated by mechanisms that alter genome function relatively rapidly. Conventional chromatin immunoprecipitation (ChIP) experiments measure transcription factor occupancy, but give no indication of kinetics and are poor predictors of transcription factor function at a given locus. To measure transcription-factor-binding dynamics across the genome, we performed competition ChIP (refs 6, 7) with a sequence-specific Saccharomyces cerevisiae transcription factor, Rap1 (ref. 8). Rap1-binding dynamics and Rap1 occupancy were only weakly correlated (R(2) = 0.14), but binding dynamics were more strongly linked to function than occupancy. Long Rap1 residence was coupled to transcriptional activation, whereas fast binding turnover, which we refer to as 'treadmilling', was linked to low transcriptional output. Thus, DNA-binding events that seem identical by conventional ChIP may have different underlying modes of interaction that lead to opposing functional outcomes. We propose that transcription factor binding turnover is a major point of regulation in determining the functional consequences of transcription factor binding, and is mediated mainly by control of competition between transcription factors and nucleosomes. Our model predicts a clutch-like mechanism that rapidly engages a treadmilling transcription factor into a stable binding state, or vice versa, to modulate transcription factor function.