The Arabidopsis gene DDM1 is required to maintain DNA methylation levels and is responsible for transposon and transgene silencing. However, rather than encoding a DNA methyltransferase, DDM1 has similarity to the SWI/SNF family of adenosine triphosphate-dependent chromatin remodeling genes, suggesting an indirect role in DNA methylation. Here we show that DDM1 is also required to maintain histone H3 methylation patterns. In wild-type heterochromatin, transposons and silent genes are associated with histone H3 methylated at lysine 9, whereas known genes are preferentially associated with methylated lysine 4. In ddm1 heterochromatin, DNA methylation is lost, and methylation of lysine 9 is largely replaced by methylation of lysine 4. Because DNA methylation has recently been shown to depend on histone H3 lysine 9 methylation, our results suggest that transposon methylation may be guided by histone H3 methylation in plant genomes. This would account for the epigenetic inheritance of hypomethylated DNA once histone H3 methylation patterns are altered.