Heritable patterns of gene expression and gene silencing are determined by chromatin states that either permit or restrict transcription. Restrictive heterochromatin in most eukaryotes is characterized by high levels of DNA methylation and histone H3 methylation at lysine 9. The functional relationship between these two modifications is the focus of intensive investigation in various organisms from fungi to mammals. Complex interactions have been discovered among various components of DNA methylation and histone methylation pathways, proteins involved in the formation of higher-order chromatin structure, chromatin remodelling activities, and RNA interference. This review discusses some aspects of this crosstalk and the cooperation between DNA methylation and histone H3K9 methylation in the establishment and maintenance of heterochromatin.