To understand the molecular mechanisms underlying paramutation, we examined the role of Unstable factor for orange1 (Ufo1) in maintaining paramutation at the maize pericarp color1 (p1) and booster1 (b1) loci. Genetic tests revealed that the Ufo1-1 mutation disrupted silencing associated with paramutation at both p1 and b1. The level of up regulation achieved at b1 was lower than that at p1, suggesting differences in the role Ufo1-1 plays at these loci. We characterized the interaction of Ufo1-1 with two silenced p1 epialleles, P1-rr' and P1-pr(TP), that were derived from a common P1-rr ancestor. Both alleles are phenotypically indistinguishable, but differ in their paramutagenic activity; P1-rr' is paramutagenic to P1-rr, while P1-pr(TP) is non-paramutagenic. Analysis of cytosine methylation revealed striking differences within an enhancer fragment that is required for paramutation; P1-rr' exhibited increased methylation at symmetric (CG and CHG) and asymmetric (CHH) sites, while P1-pr(TP) was methylated only at symmetric sites. Both silenced alleles had higher levels of dimethylation of lysine 9 on histone 3 (H3K9me2), an epigenetic mark of silent chromatin, in the enhancer region. Both epialleles were reactivated in the Ufo1-1 background; however, reactivation of P1-rr' was associated with dramatic loss of symmetric and asymmetric cytosine methylation in the enhancer, while methylation of up-regulated P1-pr(TP) was not affected. Interestingly, Ufo1-1-mediated reactivation of both alleles was accompanied with loss of H3K9me2 mark from the enhancer region. Therefore, while earlier studies have shown correlation between H3K9me2 and DNA methylation, our study shows that these two epigenetic marks are uncoupled in the Ufo1-1-reactivated p1 alleles. Furthermore, while CHH methylation at the enhancer region appears to be the major distinguishing mark between paramutagenic and non-paramutagenic p1 alleles, H3K9me2 mark appears to be important for maintaining epigenetic silencing.