Posttranslational modifications of the DNA-associated histone proteins play fundamental roles in eukaryotic transcriptional regulation. We previously discovered a novel trans-tail histone code involving monomethylated histone H4 lysine 20 (H4K20) and H3 lysine 9 (H3K9); however, the mechanisms that establish this code and its function in transcription were unknown. In this report, we demonstrate that H3K9 monomethylation is dependent upon the PR-Set7 H4K20 monomethyltransferase but independent of its catalytic function, indicating that PR-Set7 recruits an H3K9 monomethyltransferase to establish the trans-tail histone code. We determined that this histone code is involved in a transcriptional regulatory pathway in vivo whereby monomethylated H4K20 binds the L3MBTL1 repressor protein to repress specific genes, including RUNX1, a critical regulator of hematopoietic differentiation. The selective loss of monomethylated H4K20 at the RUNX1 promoter resulted in the displacement of L3MBTL1 and a concomitant increase in RUNX1 transcription. Importantly, the lack of monomethylated H4K20 in the human K562 multipotent cell line was specifically associated with spontaneous megakaryocytic differentiation, in part, by activating RUNX1. Our findings demonstrate that this newly described repression pathway is required for regulating proper megakaryopoiesis and suggests that it is likely to function similarly in other multipotent cell types to regulate specific differentiation pathways.