The functional significance of mono-, di-, and tri-methylation of lysine residues within histone proteins is under investigation. Evidence from several model organisms suggests that different methylated states of H3 Lys(9) (H3K9) are generated by specific histone methyltransferases (MTases) to mark distinct types of silent chromatin. Sequence alignment of all histone lysine MTases with known product specificity suggested that a key residue in the active site determines how many methyl groups they add. We examined this possibility both in vitro and in vivo and found that a Phe at the position equivalent to Phe(281) of Neurospora crassa DIM-5 or Phe(1205) of human G9a allows the enzyme to perform di and tri-methylation, whereas a Tyr at this position is restrictive, inhibiting tri-methylation and thus yielding a mono- or di-MTase. Phe to Tyr mutants of both DIM-5 and G9a restrict product specificity in vitro and in vivo without compromising overall catalysis. These mutants were employed to probe the biological significance of mono-, di-, and tri-methylation of H3K9 in both mouse embryonic stem cells and N. crassa. G9a F1205Y, when expressed in G9a (-/-) embryonic stem cells, rescued only H3K9 mono-methylation, but not di-methylation, to wild-type levels yet silenced Mage-a gene expression. When expressed in dim-5 strains, DIM-5 F281Y generated significant levels of mono- and di-H3K9 methylation (which are not observed in wild type Neurospora) as well as tri-methyl H3K9. The altered DIM-5 rescued the growth defect characteristic of dim-5 N. crassa but did not fully rescue the gross DNA hypomethylation of dim-5 strains.