The establishment and maintenance of mitotic and meiotic stable (epigenetic) transcription patterns is fundamental for cell determination and function. Epigenetic regulation of transcription is mediated by epigenetic activators and repressors, and may require the establishment, 'spreading' and maintenance of epigenetic signals. Although these signals remain unclear, it has been proposed that chromatin structure and consequently post-translational modification of histones may have an important role in epigenetic gene expression. Here we show that the epigenetic activator Ash1 (ref. 5) is a multi-catalytic histone methyl-transferase (HMTase) that methylates lysine residues 4 and 9 in H3 and 20 in H4. Transcriptional activation by Ash1 coincides with methylation of these three lysine residues at the promoter of Ash1 target genes. The methylation pattern placed by Ash1 may serve as a binding surface for a chromatin remodelling complex containing the epigenetic activator Brahma (Brm), an ATPase, and inhibits the interaction of epigenetic repressors with chromatin. Chromatin immunoprecipitation indicates that epigenetic activation of Ultrabithorax transcription in Drosophila coincides with trivalent methylation by Ash1 and recruitment of Brm. Thus, histone methylation by Ash1 may provide a specific signal for the establishment of epigenetic, active transcription patterns.