Histone methylation was first described more than 35 years ago, but its role has 
remained enigmatic. Proposed functions range from transcriptional regulation to 
the higher-order packaging of chromatin in preparation for mitotic condensation. 
Histone methylation can occur on Arg or Lys residues, with an exquisite site 
selectivity for Lys methylation at specific positions in the N-termini of 
histones H3 and H4. Thus, Lys methylation joins acetylation and phosphorylation 
as a third component of a 'histone code' that modifies the underlying chromatin 
structure of the genetic information. Notably, in contrast to acetylation and 
phosphorylation, Lys methylation appears to be a relatively stable histone 
modification, thereby providing an ideal epigenetic mark for more long-term 
maintenance of chromatin states. The recent discovery of the first histone Lys 
methyltransferase has allowed the identification of a molecular mechanism in 
which the specific methylation of histone H3 at Lys9 generates a binding site 
for heterochromatin-associated proteins. These findings have broad implications 
for the overall functional organization of chromosome structure at constitutive 
heterochromatin (e.g. centromeres) and for chromatin-dependent inheritance of 
gene expression patterns. This review discusses how understanding this 
methylation system should address some of the long-standing mysteries of 
heterochromatin.