For years, biologists have wondered how a relatively small set of genes can generate the many cell types of multicellular organisms. How can such remarkable phenotypic diversity be created by the same genetic template? We now know that the missing piece in this biological conundrum is the chromatin fibre — the histone and non-histone proteins that package DNA into the nucleus. The amino (N)-terminal tails of histones are subject to a range of covalent modifications, which provide binding sites for regulatory proteins that drive specific patterns of gene expression.

In the mid-1990s, it was becoming clear that histone modifications (see Milestone 22) and chromatin remodelling (see Milestone 17) were important regulators of gene expression. Yet, how specific histone modifications translated into altered gene activity remained unclear.Then, in 1995, a landmark study provided the first clue that gene-regulatory proteins directly interacted with chromatin. In Saccharomyces cerevisiae, histones are packaged into regions of transcriptionally silent, inaccessible heterochromatin by repressor proteins, such as the silent information regulators SIR3 and SIR4. A series of experiments from Michael Grunstein's laboratory revealed that the N termini of histones H3 and H4 were bound by the SIRs, showing for the first time that histones interact with gene-regulatory proteins. Importantly, further analysis revealed that acetylation of the N terminus of H4 prevented its interaction with SIR3.

Four years later, a team led by Ming-Ming Zhou solved the solution structure of the bromodomain — a motif that is found in many transcriptional co-activators. Zhou identified an acetylated histone lysine as the specific binding site of the bromodomain. It had long been known that active genes were marked by acetylated chromatin, and the Grunstein and Zhou studies provided the first insights into the functional implications of this association — acetylated histone tails prevent the colocalization of repressor proteins and provide specific binding sites for co-activators.

An intensive search for further chromatin-binding modules ensued, which proved fruitful in 2001. Three groups — led by Thomas Jenuwein, Tony Kouzarides and Shiv Grewal — independently verified that the chromo-domain of heterochromatin protein-1 (HP1) or its yeast homologue Swi6 interacted with histone H3 when methylated at the Lys9 residue. In contrast to acetyl marks, methylated H3K9 is a signature for heterochromatic domains, and the binding of HP1 at these sites maintains transcriptional silence.

These and other findings lend strong support to the concept of a 'histone code', which predicts that different combinations of histone modifications provide distinct 'readouts' in the form of chromatin-binding proteins. In particular, the binding of proteins that contain bromo- and chromodomains provides illuminating evidence for modification-dependent target specificity on the chromatin template, with contrasting effects on gene expression.

These insights into the selective interactions between histones and effector proteins have transformed our perception of eukaryotic gene regulation. And, although the details of the 'histone code' are still hotly debated, these findings have resolved long-standing mysteries about fundamental processes, such as heterochromatin formation, X-chromosome inactivation and transcriptional memory.