Lethal 3 malignant brain tumor 1 (L3MBTL1), a homolog of the Drosophila polycomb tumor suppressor l(3)mbt, contains three tandem MBT repeats (3xMBT) that are critical for transcriptional repression. We recently reported that the 3xMBT repeats interact with mono- and dimethylated lysines in the amino termini of histones H4 and H1b to promote methylation-dependent chromatin compaction. Using a series of histone peptides, we now show that the recognition of mono- and dimethylated lysines in histones H3, H4 and H1.4 (but not their trimethylated or unmodified counterparts) by 3xMBT occurs in the context of a basic environment, requiring a conserved aspartic acid (D355) in the second MBT repeat. Despite the broad range of in vitro binding, the chromatin association of L3MBTL1 mirrors the progressive accumulation of H4K20 monomethylation during the cell cycle. Furthermore, transcriptional repression by L3MBTL1 is enhanced by the H4K20 monomethyltransferase PR-SET7 (to which it binds) but not SUV420H1 (an H4K20 trimethylase) or G9a (an H3K9 dimethylase) and knockdown of PR-SET7 decreases H4K20me1 levels and the chromatin association of L3MBTL1. Our studies identify the importance of H4K20 monomethylation and of PR-SET7 for L3MBTL1 function.