Establishment and maintenance of silent chromatin in the Saccharomyces cerevisiae involves a step-wise assembly of the SIR complex. Here we demonstrate a role for the protein arginine methyltransferase Hmt1 in this process. In the absence of catalytically active Hmt1, yeast cells display increased transcription from silent chromatin regions and increased mitotic recombination within tandem repeats of rDNA. At the molecular level, loss of Hmt1's catalytic activity results in decreased Sir2 and dimethylated Arg-3 histone H4 occupancy across silent chromatin regions. These data suggest a model whereby protein arginine methylation affects the establishment and maintenance of silent chromatin.