Genome dynamics relate to regulation of gene expression, the most fundamental process in biology. Yet we still do not know whether the very process of transcription drives spatial organization and chromatin conformation at specific gene loci. To address this issue, we have optimized the ANCHOR/ParB DNA labeling system for real-time imaging and quantitative analysis of the dynamics of a single-copy transgene in human cells. Transcription of the transgene under the control of the endogenous Cyclin D1 promoter was induced by addition of 17beta-estradiol. Motion of the ANCHOR3-tagged DNA locus was recorded in the same cell prior to and during appearance of nascent mRNA visualized using the MS2 system. We found that transcription initiation resulted in rapid confinement of the mRNA-producing gene. The confinement was maintained even upon inhibition of pol2 elongation. It did not occur when recruitment of pol2 or transcription initiation was blocked by anti-estrogens or Triptolide. These results suggest that preinitiation complex formation and concomitant reorganization of the chromatin domain constrains freedom of movement of an induced gene's promoter within minutes. Confined diffusion reflects assembly of functional protein hubs and DNA processing during the rate-limiting steps of transcription.