Histone modification marks have an important role in many chromatin processes. During DNA replication, both heterochromatin and euchromatin are disrupted ahead of the replication fork and are then reassembled into their original epigenetic states behind the fork. How histone marks are accurately inherited from generation to generation is still poorly understood. In fission yeast (Schizosaccharomyces pombe), RNA interference (RNAi)-mediated histone methylation is cell cycle regulated. Centromeric repeats are transiently transcribed in the S phase of the cell cycle and are processed into short interfering RNAs (siRNAs) by the complexes RITS (RNA-induced initiation of transcriptional gene silencing) and RDRC (RNA-directed RNA polymerase complex). The small RNAs together with silencing factors-including Dos1 (also known as Clr8 and Raf1), Dos2 (also known as Clr7 and Raf2), Rik1 and Lid2-promote heterochromatic methylation of histone H3 at lysine 9 (H3K9) by a histone methyltransferase, Clr4 (refs 8-13). The methylation of H3K9 provides a binding site for Swi6, a structural and functional homologue of metazoan heterochromatin protein 1 (HP1). Here we characterize a silencing complex in fission yeast that contains Dos2, Rik1, Mms19 and Cdc20 (the catalytic subunit of DNA polymerase-ε). This complex regulates RNA polymerase II (RNA Pol II) activity in heterochromatin and is required for DNA replication and heterochromatin assembly. Our findings provide a molecular link between DNA replication and histone methylation, shedding light on how epigenetic marks are transmitted during each cell cycle.