Antisense transcription through genic regions is pervasive in most genomes; however, its functional significance is still unclear. We are studying the role of antisense transcripts (COOLAIR) in the cold-induced, epigenetic silencing of Arabidopsis FLOWERING LOCUS C (FLC), a regulator of the transition to reproduction. Here we use single-molecule RNA FISH to address the mechanistic relationship of FLC and COOLAIR transcription at the cellular level. We demonstrate that while sense and antisense transcripts can co-occur in the same cell they are mutually exclusive at individual loci. Cold strongly upregulates COOLAIR transcription in an increased number of cells and through the mutually exclusive relationship facilitates shutdown of sense FLC transcription in cis. COOLAIR transcripts form dense clouds at each locus, acting to influence FLC transcription through changed H3K36me3 dynamics. These results may have general implications for other loci showing both sense and antisense transcription.