Nucleosomal histones can be methylated in vivo at multiple residues and defined methylation patterns are related to distinct functional readouts of chromosomal DNA. Histone methylation has emerged as an important post-translational modification involved in transcriptional regulation and genome integrity. Recent progress in determining the cis and trans determinants of this process revealed multiple roles for histone methylation in epigenetic memory of active and silent states. The analysis of imprinted, X-linked and heterochromatic sequences disclosed mechanistic similarities for heritable transcriptional repression, pointing to a common mode of action. Moreover, the view of histone methylation as a stable modification has recently been challenged by studies revealing a number of pathways that are capable of removing histone methylation. Thus, in addition to having great in vivo complexity, this modification appears more dynamic then was previously thought.