RNA-directed DNA methylation contributes substantially to epigenetic regulation of the plant genome. Methylation is guided to homologous DNA target sequences by 24 nt 'heterochromatic' small RNAs produced by nucleolar-localized components of the RNAi machinery and a plant-specific RNA polymerase, Pol IV. Plants contain unusually large and diverse populations of small RNAs, many of which originate from transposons and repeats. These sequences are frequent targets of methylation, and they are able to bring plant genes in their vicinity under small RNA-mediated control. RNA-directed DNA methylation can be removed by enzymatic demethylation, providing plants with a versatile system that facilitates epigenetic plasticity. In addition to subduing transposons, RNA-directed DNA methylation has roles in plant development and, perhaps, stress responses.