Histone H3.3 is a constitutively expressed H3 variant implicated in the epigenetic inheritance of chromatin structures. Recently, the PML-nuclear body (PML-NB)/Nuclear Domain 10 (ND10) proteins, Daxx and ATRX, were found to regulate replication-independent histone H3.3 chromatin assembly at telomeres and pericentric heterochromatin. As it is not completely understood how PML-NBs/ND10s regulate transcription and resistance to viral infection, we have used a CMV-promoter-regulated inducible transgene array, at which Daxx and ATRX are enriched, to delineate the mechanisms through which they regulate transcription. When integrated into HeLa cells, which express both Daxx and ATRX, the array is refractory to activation. However, transcription can be induced when ICP0, the HSV-1 E3 ubiquitin ligase required to reverse latency, is expressed. As ATRX and Daxx are depleted from the activated array in ICP0-expressing HeLa cells, this suggests that they are required to maintain a repressed chromatin environment. As histone H3.3 is strongly recruited to the ICP0-activated array but does not co-localize with the DNA, this also suggests that chromatin assembly is blocked during activation. The conclusion that the Daxx and ATRX pathway is required for transcriptional repression and chromatin assembly at this site is further supported by the finding that an array integrated into the ATRX-negative U2OS cell line can be robustly activated and that histone H3.3 is similarly recruited and unincorporated into the chromatin. Therefore, this study has important implications for understanding gene silencing, viral latency and PML-NB/ND10 function.