Deposition of variant histones provides a mechanism to reset and to potentially specify chromatin states. We determined the distribution of H3 and its variant H3.3 relative to chromatin structure and elongating polymerase. H3.3 is enriched throughout active genes similar to polymerase, yet its distribution is very distinct from that of several euchromatic histone modifications, which are highly biased toward the 5' part of active genes. Upon gene induction we observe displacement of both H3 and H3.3 followed by selective deposition of H3.3. These results support a model in which H3.3 deposition compensates for transcription-coupled nucleosomal displacement yet does not predetermine tail modifications.