DNA methylation and histone methylation are two key epigenetic modifications that help govern heterochromatin dynamics. The roles for these chromatin-modifying activities in directing tissue-specific development remain largely unknown. To address this issue, we examined the roles of DNA methyltransferase 1 (Dnmt1) and the H3K9 histone methyltransferase Suv39h1 in zebra fish development. Knockdown of Dnmt1 in zebra fish embryos caused defects in terminal differentiation of the intestine, exocrine pancreas, and retina. Interestingly, not all tissues required Dnmt1, as differentiation of the liver and endocrine pancreas appeared normal. Proper differentiation depended on Dnmt1 catalytic activity, as Dnmt1 morphants could be rescued by active zebra fish or human DNMT1 but not by catalytically inactive derivatives. Dnmt1 morphants exhibited dramatic reductions of both genomic cytosine methylation and genome-wide H3K9 trimethyl levels, leading us to investigate the overlap of in vivo functions of Dnmt1 and Suv39h1. Embryos lacking Suv39h1 had organ-specific terminal differentiation defects that produced largely phenocopies of Dnmt1 morphants but retained wild-type levels of DNA methylation. Remarkably, suv39h1 overexpression rescued markers of terminal differentiation in Dnmt1 morphants. Our results suggest that Dnmt1 activity helps direct histone methylation by Suv39h1 and that, together, Dnmt1 and Suv39h1 help guide the terminal differentiation of particular tissues.