Studies of histone methylation have shown that H3 can be methylated at lysine 4 (Lys4) or lysine 9 (Lys9). Whereas H3-Lys4 methylation has been correlated with active gene expression, H3-Lys9 methylation has been linked to gene silencing and assembly of heterochromatin in mouse and Schizosaccharomyces pombe. The chromodomain of mouse HP1 (and Swi6 in S. pombe) binds H3 methylated at Lys9, and methylation at this site is thought to mark and promote heterochromatin assembly. We have used a well-studied model of mammalian epigenetic silencing, the human inactive X chromosome, to show that enrichment for H3 methylated at Lys9 is also a distinguishing mark of facultative heterochromatin. In contrast, H3 methylated at Lys4 is depleted in the inactive X chromosome, except in three 'hot spots' of enrichment along its length. Chromatin immunoprecipitation analyses further show that Lys9 methylation is associated with promoters of inactive genes, whereas Lys4 methylation is associated with active genes on the X chromosome. These data demonstrate that differential methylation at two distinct sites of the H3 amino terminus correlates with contrasting gene activities and may be part of a 'histone code' involved in establishing and maintaining facultative heterochromatin.