We developed a model system whereby HP1 can be targeted to pericentric heterochromatin in ES cells lacking Suv(3)9h1/2 histone methyltransferase (HMTase) activities. HP1 so targeted can reconstitute tri-methylated lysine 9 of histone H3 (Me(3)K9143) and tri-methylated lysine 20 of histone H4 (Me(3)K20H4) at pericentric heterochromatin, indicating that HP1 can regulate the distribution of these histone modifications in vivo. Both homo- and hetero-typic interactions between the HP1 isotypes were demonstrated in vivo as were HP1 interactions with the ESET/SETDB1 HMTase and the ATRX chromatin remodelling enzyme. We conclude that HP1 not only "deciphers" the histone code but can also "encode it." (c) 2005 Elsevier Inc. All rights reserved.