At the imprinted Rasgrf1 locus in mouse, a cis-acting sequence controls DNA methylation at a differentially methylated domain (DMD). While characterizing epigenetic marks over the DMD, we observed that DNA and H3K27 trimethylation are mutually exclusive, with DNA and H3K27 methylation limited to the paternal and maternal sequences, respectively. The mutual exclusion arises because one mark prevents placement of the other. We demonstrated this in five ways: using 5-azacytidine treatments and mutations at the endogenous locus that disrupt DNA methylation; using a transgenic model in which the maternal DMD inappropriately acquired DNA methylation; and by analyzing materials from cells and embryos lacking SUZ12 and YY1. SUZ12 is part of the PRC2 complex, which is needed for placing H3K27me3, and YY1 recruits PRC2 to sites of action. Results from each experimental system consistently demonstrated antagonism between H3K27me3 and DNA methylation. When DNA methylation was lost, H3K27me3 encroached into sites where it had not been before; inappropriate acquisition of DNA methylation excluded normal placement of H3K27me3, and loss of factors needed for H3K27 methylation enabled DNA methylation to appear where it had been excluded. These data reveal the previously unknown antagonism between H3K27 and DNA methylation and identify a means by which epigenetic states may change during disease and development.