Recent work in Arabidopsis has revealed a plant-specific RNA polymerase, pol IV, that is specialized for RNA interference (RNAi)-mediated, chromatin-based gene silencing. Two functionally diversified pol IV complexes have been identified: pol IVa is required to produce or amplify the small RNA trigger, whereas pol IVb, together with the plant-specific SWI/SNF-like chromatin remodeling factor DRD1, acts downstream from small RNA formation to induce de novo cytosine methylation of homologous DNA by an unknown mechanism. Retrotransposon long terminal repeats (LTRs) and other unannotated sequences that encode small RNAs are prime targets for DRD1/pol IVb-mediated cytosine methylation. In drd1 and pol IVb mutants, silent LTRs in euchromatin can be derepressed, resulting in enhanced transcription of adjacent genes or intergenic regions. In addition to mediating de novo methylation, some evidence suggests that DRD1 and pol IVb are also involved in a reciprocal process of active demethylation, perhaps in conjunction with DNA glycosylase domain-containing proteins such as ROS1. We speculate that DRD1/pol IV-dependent methylation/demethylation evolved in the plant kingdom as a means to facilitate rapid, reversible changes in gene expression, which might have adaptive significance for immobile plants growing in unpredictable environments.