Linker histone H1 is a protein component of chromatin and has been linked to higher-order chromatin compaction and global gene silencing. However, a growing body of evidence suggests that H1 plays a gene-specific role, regulating a relatively small number of genes. Here we show that H1.2, one of the H1 subtypes, is overexpressed in cancer cells and contributes to gene silencing. H1.2 gets recruited to distinct chromatin regions in a manner dependent on EZH2-mediated H3K27me3, and inhibits transcription of multiple growth suppressive genes via modulation of chromatin architecture. The C-terminal tail of H1.2 is critical for the observed effects, because mutations of three H1.2-specific amino acids in this domain abrogate the ability of H1.2 to bind H3K27me3 nucleosomes and inactivate target genes. Collectively, these results provide a molecular explanation for H1.2 functions in the regulation of chromatin folding and indicate that H3K27me3 is a key mechanism governing the recruitment and activity of H1.2 at target loci.