DNA methylation has been implicated in chromatin condensation and nuclear organization, especially at sites of constitutive heterochromatin. How this is mediated has not been clear. In this study, using mutant mouse embryonic stem cells completely lacking in DNA methylation, we show that DNA methylation affects nuclear organization and nucleosome structure but not chromatin compaction. In the absence of DNA methylation, there is increased nuclear clustering of pericentric heterochromatin and extensive changes in primary chromatin structure. Global levels of histone H3 methylation and acetylation are altered, and there is a decrease in the mobility of linker histones. However, the compaction of both bulk chromatin and heterochromatin, as assayed by nuclease digestion and sucrose gradient sedimentation, is unaltered by the loss of DNA methylation. This study shows how the complete loss of a major epigenetic mark can have an impact on unexpected levels of chromatin structure and nuclear organization and provides evidence for a novel link between DNA methylation and linker histones in the regulation of chromatin structure.