Histone H3 lysine 9 (H3-K9) methylation has been shown to correlate with transcriptional repression and serve as a specific binding site for heterochromatin protein 1 (HP1). In this study, we investigated the relationship between H3-K9 methylation, transcriptional repression, and HP1 recruitment by comparing the effects of tethering two H3-K9-specific histone methyltransferases, SUV39H1 and G9a, to chromatin on transcription and HP1 recruitment. Although both SUV39H1 and G9a induced H3-K9 methylation and repressed transcription, only SUV39H1 was able to recruit HP1 to chromatin. Targeting HP1 to chromatin required not only K9 methylation but also a direct protein-protein interaction between SUV39H1 and HP1. Targeting methyl-K9 or a HP1-interacting region of SUV39H1 alone to chromatin was not sufficient to recruit HP1. We also demonstrate that methyl-K9 can suppress transcription independently of HP1 through a mechanism involving histone deacetylation. In an effort to understand how H3-K9 methylation led to histone deacetylation in both H3 and H4, we found that H3-K9 methylation inhibited histone acetylation by p300 but not its association with chromatin. Collectively, these data indicate that H3-K9 methylation alone can suppress transcription but is insufficient for HP1 recruitment in the context of chromatin exemplifying the importance of chromatin-associated factors in reading the histone code.