Transcription in eukaryotic cells has been described as quantal, with pulses of messenger RNA produced in a probabilistic manner^,. This description reflects the inherently stochastic nature^,,,,, of gene expression, known to be a major factor in the heterogeneous response of individual cells within a clonal population to an inducing stimulus^,,,,,,. Here we show in Saccharomyces cerevisiae that stochasticity (noise) arising from transcription contributes significantly to the level of heterogeneity within a eukaryotic clonal population, in contrast to observations in prokaryotes, and that such noise can be modulated at the translational level. We use a stochastic model of transcription initiation specific to eukaryotes to show that pulsatile mRNA production, through reinitiation, is crucial for the dependence of noise on transcriptional efficiency, highlighting a key difference between eukaryotic and prokaryotic sources of noise. Furthermore, we explore the propagation of noise in a gene cascade network and demonstrate experimentally that increased noise in the transcription of a regulatory protein leads to increased cell–cell variability in the target gene output, resulting in prolonged bistable expression states. This result has implications for the role of noise in phenotypic variation and cellular differentiation.