Distinct modifications of histone amino termini, such as acetylation, phosphorylation and methylation, have been proposed to underlie a chromatin-based regulatory mechanism that modulates the accessibility of genetic information. In addition to histone modifications that facilitate gene activity, it is of similar importance to restrict inappropriate gene expression if cellular and developmental programmes are to proceed unperturbed. Here we show that mammalian methyltransferases that selectively methylate histone H3 on lysine 9 (Suv39h HMTases) generate a binding site for HP1 proteins--a family of heterochromatic adaptor molecules implicated in both gene silencing and supra-nucleosomal chromatin structure. High-affinity in vitro recognition of a methylated histone H3 peptide by HP1 requires a functional chromo domain; thus, the HP1 chromo domain is a specific interaction motif for the methyl epitope on lysine9 of histone H3. In vivo, heterochromatin association of HP1 proteins is lost in Suv39h double-null primary mouse fibroblasts but is restored after the re-introduction of a catalytically active SWUV39H1 HMTase. Our data define a molecular mechanism through which the SUV39H-HP1 methylation system can contribute to the propagation of heterochromatic subdomains in native chromatin.