Setdb1/Eset is a histone H3 lysine 9 (H3K9)-specific methyltransferase that associates with various transcription factors to regulate gene expression via chromatin remodeling. Here, we report that Setdb1 associates with promyelocytic leukemia (Pml) protein from the early stage of mouse development and is a constitutive member of promyelocytic leukemia (PML)-nuclear bodies (PML-NBs) that have been linked to many cellular processes such as apoptosis, DNA damage responses, and transcriptional regulation. Arsenic treatment, which induces Pml degradation, caused Setdb1 signals to disappear. Setdb1 knockdown resulted in dismantlement of PML-NBs. Immunoprecipitation results demonstrated physical interactions between Setdb1 and Pml. Chromatin immunoprecipitation revealed that, within the frame of PML-NBs, Setdb1 binds the promoter of Id2 and suppresses its expression through installing H3K9 methylation. Our findings suggest that Setdb1 performs dual, but inseparable, functions at PML-NBs to maintain the structural integrity of PML-NBs and to control PML-NB-associated genes transcriptionally.