Histone lysine acetylation and methylation have an important role during gene transcription in a chromatin context. Knowledge concerning the types of protein modules that can interact with acetyl-lysine has so far been limited to bromodomains. Recently, a tandem plant homeodomain (PHD) finger (PHD1-PHD2, or PHD12) of human DPF3b, which functions in association with the BAF chromatin remodelling complex to initiate gene transcription during heart and muscle development, was reported to bind histones H3 and H4 in an acetylation-sensitive manner, making it the first alternative to bromodomains for acetyl-lysine binding. Here we report the structural mechanism of acetylated histone binding by the double PHD fingers of DPF3b. Our three-dimensional solution structures and biochemical analysis of DPF3b highlight the molecular basis of the integrated tandem PHD finger, which acts as one functional unit in the sequence-specific recognition of lysine-14-acetylated histone H3 (H3K14ac). Whereas the interaction with H3 is promoted by acetylation at lysine 14, it is inhibited by methylation at lysine 4, and these opposing influences are important during transcriptional activation of the mouse DPF3b target genes Pitx2 and Jmjd1c. Binding of this tandem protein module to chromatin can thus be regulated by different histone modifications during the initiation of gene transcription.