According to the transcription factory model, localized transcription sites composed of immobilized polymerase molecules transcribe chromatin by reeling it through the transcription site and extruding it to form a surrounding domain of recently transcribed decondensed chromatin. Although transcription sites have been identified in various cells, surrounding domains of recently transcribed decondensed chromatin have not. We report evidence that transcription sites associated with a tandem gene array in mouse cells are indeed surrounded by or adjacent to a domain of decondensed chromatin composed of sequences from the gene array. Formation of this decondensed domain requires transcription and topoisomerase IIalpha activity. The decondensed domain is enriched for the trimethyl H3K36 mark that is associated with recently transcribed chromatin in yeast and several mammalian systems. Consistent with this, chromatin immunoprecipitation demonstrates a comparable enrichment of this mark in transcribed sequences at the tandem gene array. These results provide new support for the pol II factory model, in which an immobilized polymerase molecule extrudes decondensed, transcribed sequences into its surroundings.