We have identified a DNA methyltransferase of the Dnmt2 family in Dictyostelium that was denominated DnmA. Expression of the dnmA gene is downregulated during the developmental cycle. Overall DNA methylation in Dictyostelium is approximately 0.2% of the cytosine residues, which indicates its restriction to a limited set of genomic loci. Bisulfite sequencing of specific sites revealed that DnmA is responsible for methylation of mostly asymmetric C-residues in the retrotransposons DIRS-1 and Skipper. Disruption of the gene resulted in a loss of methylation and in increased transcription and mobilization of Skipper. Skipper transcription was also upregulated in strains that had genes encoding components of the RNA interference pathway disrupted. In contrast, DIRS-1 expression was not affected by a loss of DnmA but was strongly increased in strains that had the RNA-directed RNA polymerase gene rrpC disrupted. A large number of siRNAs were found that corresponded to the DIRS-1 sequence, suggesting concerted regulation of DIRS-1 expression by RNAi and DNA modification. No siRNAs corresponding to the standard Skipper element were found. The data show that DNA methylation plays a crucial role in epigenetic gene silencing in Dictyostelium but that different, partially overlapping mechanisms control transposon silencing.