DNA methylation can contribute to transcriptional silencing through several transcriptionally repressive complexes, which include methyl-CpG binding domain proteins (MBDs) and histone deacetylases (HDACs). We show here that the chief enzyme that maintains mammalian DNA methylation, DNMT1, can also establish a repressive transcription complex. The non-catalytic amino terminus of DNMT1 binds to HDAC2 and a new protein, DMAP1 (for DNMT1 associated protein), and can mediate transcriptional repression. DMAP1 has intrinsic transcription repressive activity, and binds to the transcriptional co-repressor TSG101. DMAP1 is targeted to replication foci through interaction with the far N terminus of DNMT1 throughout S phase, whereas HDAC2 joins DNMT1 and DMAP1 only during late S phase, providing a platform for how histones may become deacetylated in heterochromatin following replication. Thus, DNMT1 not only maintains DNA methylation, but also may directly target, in a heritable manner, transcriptionally repressive chromatin to the genome during DNA replication.