RNA-directed DNA methylation (RdDM) is a conserved mechanism for epigenetic silencing of transposons and other repetitive elements. We report that the rdm4 (RNA-directed DNA Methylation4) mutation not only impairs RdDM, but also causes pleiotropic developmental defects in Arabidopsis. Both RNA polymerase II (Pol II)- and Pol V-dependent transcripts are affected in the rdm4 mutant. RDM4 encodes a novel protein that is conserved from yeast to humans and interacts with Pol II and Pol V in plants. Our results suggest that RDM4 functions in epigenetic regulation and plant development by serving as a transcriptional regulator for RNA Pol V and Pol II, respectively.