SWR1-Com, which is responsible for depositing H2A.Z into chromatin, shares four subunits with the NuA4 histone acetyltransferase complex. This overlap in composition led us to test whether H2A.Z was a substrate of NuA4 in vitro and in vivo. The N-terminal tail of H2A.Z was acetylated in vivo at multiple sites by a combination of NuA4 and SAGA. H2A.Z acetylation was also dependent on SWR1-Com, causing H2A.Z to be efficiently acetylated only when incorporated in chromatin. Unacetylatable H2A.Z mutants were, like wild-type H2A.Z, enriched at heterochromatin boundaries, but were unable to block spreading of heterochromatin. A mutant version of H2A.Z that could not be acetylated, in combination with a mutation in a nonessential gene in the NuA4 complex, caused a pronounced decrease in growth rate. This H2A.Z mutation was lethal in combination with a mutant version of histone H4 that could not be acetylated by NuA4. Taken together, these results show a role for H2A.Z acetylation in restricting silent chromatin, and reveal that acetylation of H2A.Z and H4 can contribute to a common function essential to life.