Argonaute/Piwi proteins can regulate gene expression via RNA degradation and translational regulation using small RNAs as guides. They also promote the establishment of suppressive epigenetic marks on repeat sequences in diverse organisms. In mice, the nuclear Piwi protein MIWI2 and Piwi-interacting RNAs (piRNAs) are required for DNA methylation of retrotransposon sequences and some other sequences. However, its underlying molecular mechanisms remain unclear. Here, we show that piRNA-dependent regions are transcribed at the stage when piRNA-mediated DNA methylation takes place. MIWI2 specifically interacts with RNAs from these regions. In addition, we generated mice with deletion of a retrotransposon sequence either in a representative piRNA-dependent region or in a piRNA cluster. Both deleted regions were required for the establishment of DNA methylation of the piRNA-dependent region, indicating that piRNAs determine the target specificity of MIWI2-mediated DNA methylation. Our results indicate that MIWI2 affects the chromatin state through base-pairing between piRNAs and nascent RNAs, as observed in other organisms possessing small RNA-mediated epigenetic regulation.