DNA methylation, methylation of histone H3 at Lys9 (H3K9me3) and hypoacetylated 
histones are common molecular features of heterochromatin. Important details of 
their functions and inter-relationships remain unclear, however. In Neurospora 
crassa, H3K9me3 directs DNA methylation through a complex containing 
heterochromatin protein 1 (HP1) and the DNA methyltransferase DIM-2. We 
identified a distinct HP1 complex, HP1, CDP-2, HDA-1 and CHAP (HCHC), and found 
that it is responsible for silencing independently of DNA methylation. HCHC 
defects cause hyperacetylation of centromeric histones, greater accessibility of 
DIM-2 and hypermethylation of centromeric DNA. Loss of HCHC also causes 
mislocalization of the DIM-5 H3K9 methyltransferase at a subset of interstitial 
methylated regions, leading to selective DNA hypomethylation. We demonstrate 
that HP1 forms distinct DNA methylation and histone deacetylation complexes that 
work in parallel to assemble silent chromatin in N. crassa.