Although most eukaryotic genomes lack operons, they contain some physical clusters of genes that are related in function despite being unrelated in sequence(1-5). How these clusters are formed during evolution is unknown. The DAL cluster is the largest metabolic gene cluster in yeast and consists of six adjacent genes encoding proteins that enable Saccharomyces cerevisiae to use allantoin as a nitrogen source(6). We show here that the DAL cluster was assembled, quite recently in evolutionary terms, through a set of genomic rearrangements that happened almost simultaneously. Six of the eight genes involved in allantoin degradation, which were previously scattered around the genome, became relocated to a single subtelomeric site in an ancestor of S. cerevisiae and Saccharomyces castellii. These genomic rearrangements coincided with a biochemical reorganization of the purine degradation pathway, which switched to importing allantoin instead of urate. This change eliminated urate oxidase, one of several oxygen- consuming enzymes that were lost by yeasts that can grow vigorously in anaerobic conditions. The DAL cluster is located in a domain of modified chromatin involving both H2A. Z histone exchange and Hst1- Sum1 - mediated histone deacetylation, and it may be a coadapted gene complex formed by epistatic selection.