We have developed an inducible system to visualize gene expression at the levels of DNA, RNA and protein in living cells. The system is composed of a 200 copy transgene array integrated into a euchromatic region of chromosome 1 in human U2OS cells. The condensed array is heterochromatic as it is associated with HP1, histone H3 methylated at lysine 9, and several histone methyltransferases. Upon transcriptional induction, HP1alpha is depleted from the locus and the histone variant H3.3 is deposited suggesting that histone exchange is a mechanism through which heterochromatin is transformed into a transcriptionally active state. RNA levels at the transcription site increase immediately after the induction of transcription and the rate of synthesis slows over time. Using this system, we are able to correlate changes in chromatin structure with the progression of transcriptional activation allowing us to obtain a real-time integrative view of gene expression.