DNA methylation and histone modification are two major epigenetic pathways that interplay to regulate transcriptional activity and other genome functions. Dnmt3L is a regulatory factor for the de novo DNA methyltransferases Dnmt3a and Dnmt3b. Although recent biochemical studies have revealed that Dnmt3L binds to the tail of histone H3 with unmethylated lysine 4 in vitro, the requirement of chromatin components for DNA methylation has not been examined, and functional evidence for the connection of histone tails to DNA methylation is still lacking. Here, we used the budding yeast Saccharomyces cerevisiae as a model system to investigate the chromatin determinants of DNA methylation through ectopic expression of murine Dnmt3a and Dnmt3L. We found that the N terminus of histone H3 tail is required for de novo methylation, while the central part encompassing lysines 9 and 27, as well as the H4 tail are dispensable. DNA methylation occurs predominantly in heterochromatin regions lacking H3K4 methylation. In mutant strains depleted of H3K4 methylation, the DNA methylation level increased 5-fold. The methylation activity of Dnmt3a largely depends on the Dnmt3L's PHD domain recognizing the histone H3 tail with unmethylated lysine 4. Functional analysis of Dnmt3L in mouse ES cells confirmed that the chromatin-recognition ability of Dnmt3L's PHD domain is indeed required for efficient methylation at the promoter of the endogenous Dnmt3L gene. These findings establish the N terminus of histone H3 tail with an unmethylated lysine 4 as a chromatin determinant for DNA methylation.