Recent findings implicate alternate core promoter recognition complexes in regulating cellular differentiation. Here we report a spatial segregation of the alternative core factor TAF3, but not canonical TFIID subunits, away from the nuclear periphery, where the key myogenic gene MyoD is preferentially localized in myoblasts. This segregation is correlated with the differential occupancy of TAF3 versus TFIID at the MyoD promoter. Loss of this segregation by modulating either the intranuclear location of the MyoD gene or TAF3 protein leads to altered TAF3 occupancy at the MyoD promoter. Intriguingly, in differentiated myotubes, the MyoD gene is repositioned to the nuclear interior, where TAF3 resides. The specific high-affinity recognition of H3K4Me3 by the TAF3 PHD (plant homeodomain) finger appears to be required for the sequestration of TAF3 to the nuclear interior. We suggest that intranuclear sequestration of core transcription components and their target genes provides an additional mechanism for promoter selectivity during differentiation.