In eukaryotic cells, chromatin is classified into euchromatin, which is active in transcription, and heterochromatin that silences transcription. Histones in these two domains contain distinct modifications. Chromatin assembly factor 1 (CAF-1) is a highly conserved protein that functions in DNA replication, DNA repair, and heterochromatin silencing. CAF-1 binds histones H3 and H4 and deposits histones onto DNA to form nucleosomes. However, modifications on H3 and H4 associated with CAF-1 are not known. Here, we have purified a complex containing CAF-1 and H3 and H4 from yeast cells and determined the modifications present on these histones using linear ion trap FT-ICR mass spectrometry. H4 that copurified with CAF-1 was a mixture of isoforms acetylated at lysines 5, 8, 12, and 16, whereas an H3 peptide methylated at lysine 79 and an H3 peptide acetylated at lysine 56 were detected. In yeast cell extracts, these two H3 modifications peaked in the late S phase with different kinetics. Moreover, the association of CAF-1 with H3 methylated at lysine 79 appeared to occur in the late S phase. Finally, cells lacking both Dot1p, the methyltransferase that methylates H3 lysine 79, and Cac1p, the large subunit of CAF-1, exhibited a dramatic loss of telomeric silencing and increased sensitivity to DNA damaging agents. Together, these data indicate that CAF-1 interacts with H3 methylated at lysine 79 during the processes of epigenetic silencing and DNA repair.