Friedreich's ataxia (FRDA) is caused by biallelic expansion of GAA repeats leading to the transcriptional silencing of the frataxin (FXN) gene. The exact molecular mechanism of inhibition of FXN expression is unclear. Herein, we analyze the effects of hyperexpanded GAA repeats on transcription status and chromatin modifications proximal and distal to the GAA repeats. Using chromatin immunoprecipitation and quantitative PCR we detected significant changes in the chromatin landscape in FRDA cells relative to control cells downstream of the promoter, especially in the vicinity of the GAA tract. In this region, hyperexpanded GAAs induced a particular constellation of histone modifications typically associated with heterochromatin-like structures. Similar epigenetic changes were observed in GFP reporter construct containing 560 GAA repeats. Furthermore, we observed similar levels of FXN pre-mRNA at a region upstream of hyperexpanded GAA repeats in FRDA and control cells, indicating similar efficiency of transcription initiation. We also demonstrated that histone modifications associated with hyperexpanded GAA repeats are independent of initiation and progression of transcription. Our data provide strong evidence that FXN deficiency in FRDA patients results from a block of transition from initiation to a productive elongation of FXN transcription due to heterochromatin-like structures formed in the proximity of the hyperexpanded GAAs.