SU(VAR)3–9 like histone methyltransferases control heterochromatic domains in eukaryotes. In Arabidopsis, 10 SUVH genes encode SU(VAR)3–9 homologues where SUVH1, SUVH2 and SUVH4 (KRYPTONITE) represent distinct subgroups of SUVH genes. Loss of SUVH1 and SUVH4 causes weak reduction of heterochromatic histone H3K9 dimethylation, whereas in SUVH2 null plants mono‐ and dimethyl H3K9, mono‐ and dimethyl H3K27, and monomethyl H4K20, the histone methylation marks of Arabidopsis heterochromatin are significantly reduced. Like animal SU(VAR)3–9 proteins SUVH2 displays strong dosage‐dependent effects. Loss of function suppresses, whereas overexpression enhances, gene silencing, causes ectopic heterochromatization and significant growth defects. Furthermore, modification of transgene silencing by SUVH2 is partially transmitted to the offspring plants. This epigenetic stability correlates with heritable changes in DNA methylation. Mutational dissection of SUVH2 indicates an implication of its N‐terminus and YDG domain in directing DNA methylation to target sequences, a prerequisite for consecutive histone methylation. Gene silencing by SUVH2 depends on MET1 and DDM1, but not CMT3. In Arabidopsis, SUVH2 with its histone H3K9 and H4K20 methylation activity has a central role in heterochromatic gene silencing.