BACKGROUND: Reduced copy number of the D4Z4 macrosatellite at human chromosome 4q35 is associated with facioscapulohumeral muscular dystrophy (FSHD). A pervasive idea is that chromatin alterations at the 4q35 locus following D4Z4 repeat unit deletion lead to disease via inappropriate expression of nearby genes. Here, we sought to analyze transcription and chromatin characteristics at specific regions of 4q35 and how these are affected by D4Z4 deletions and exogenous stresses. RESULTS: We found that the 4q subtelomere is subdivided into discrete domains, each with characteristic chromatin features associated with distinct gene expression profiles. Centromeric genes within 4q35 (SLC25A4, FAT1 and FRG1) display active histone marks at their promoters. In contrast, poised or repressed markings are present at telomeric loci including FRG2, DBE-T and D4Z4. We discovered that these discrete domains undergo region-specific chromatin changes upon treatment with chromatin enzyme inhibitors or genotoxic drugs. We demonstrated that the 4q35 telomeric FRG2, DBE-T and D4Z4-derived transcripts are induced upon DNA damage to levels inversely correlated with the D4Z4 repeat number, are stabilized through posttranscriptional mechanisms upon DNA damage and are bound to chromatin. CONCLUSION: Our study reveals unforeseen biochemical features of RNAs from clustered transcription units within the 4q35 subtelomere. Specifically, the FRG2, DBE-T and D4Z4-derived transcripts are chromatin-associated and are stabilized posttranscriptionally after induction by genotoxic stress. Remarkably, the extent of this response is modulated by the copy number of the D4Z4 repeats, raising new hypotheses about their regulation and function in human biology and disease.