During development, covalent modification of both, histones and DNA contribute to the specification and maintenance of cell identity. Repressive modifications are thought to stabilize cell type specific gene expression patterns, reducing the likelihood of reactivation of lineage-unrelated genes. In this report, we review the recent literature to deduce mechanisms underlying Polycomb and H3K9 methylation mediated repression, and describe the functional interplay with activating H3K4 methylation. We summarize recent data that indicate a close relationship between GC density of promoter sequences, transcription factor binding and the antagonizing activities of distinct epigenetic regulators such as histone methyltransferases (HMTs) and histone demethylases (HDMs). Subsequently, we compare chromatin signatures associated with different types of transcriptional outcomes from stable repression to highly dynamic regulated genes, strongly suggesting that the interplay of different epigenetic pathways is essential in defining specific types of heritable chromatin and associated transcriptional states.