Chromosomes in all organisms are highly organized and divided into multiple chromosomal interaction domains, or topological domains. Regions of active, high transcription help establish and maintain domain boundaries, but precisely how this occurs remains unclear. Here, using fluorescence microscopy and chromosome conformation capture in conjunction with deep sequencing (Hi-C), we show that in Caulobacter crescentus, both transcription rate and transcript length, independent of concurrent translation, drive the formation of domain boundaries. We find that long, highly expressed genes do not form topological boundaries simply through the inhibition of supercoil diffusion. Instead, our results support a model in which long, active regions of transcription drive local decompaction of the chromosome, with these more open regions of the chromosome forming spatial gaps in vivo that diminish contacts between DNA in neighboring domains. These insights into the molecular forces responsible for domain formation in Caulobacter likely generalize to other bacteria and possibly eukaryotes.