Eukaryotic gene transcription is accompanied by acetylation and methylation of nucleosomes near promoters, but the locations and roles of histone modifications elsewhere in the genome remain unclear. We determined the chromatin modification states in high resolution along 30 Mb of the human genome and found that active promoters are marked by trimethylation of Lys4 of histone H3 (H3K4), whereas enhancers are marked by monomethylation, but not trimethylation, of H3K4. We developed computational algorithms using these distinct chromatin signatures to identify new regulatory elements, predicting over 200 promoters and 400 enhancers within the 30-Mb region. This approach accurately predicted the location and function of independently identified regulatory elements with high sensitivity and specificity and uncovered a novel functional enhancer for the carnitine transporter SLC22A5 (OCTN2). Our results give insight into the connections between chromatin modifications and transcriptional regulatory activity and provide a new tool for the functional annotation of the human genome.