Cytosine methylation of genomic DNA controls gene expression and maintains genome stability. How a specific DNA sequence is targeted for methylation by a methyltransferase is largely unknown. Here, we show that histone H3 tails lacking lysine 4 (K4) methylation function as an allosteric activator for methyltransferase Dnmt3a by binding to its plant homeodomain (PHD). In vitro, histone H3 peptides stimulated the methylation activity of Dnmt3a up to 8-fold, in a manner reversely correlated with the level of K4 methylation. The biological significance of allosteric regulation was manifested by molecular modeling and identification of key residues in both the PHD and the catalytic domain of Dnmt3a whose mutations impaired the stimulation of methylation activity by H3 peptides but not the binding of H3 peptides. Significantly, these mutant Dnmt3a proteins were almost inactive in DNA methylation when expressed in mouse embryonic stem cells while their recruitment to genomic targets was unaltered. We therefore propose a two-step mechanism for de novo DNA methylation - first recruitment of the methyltransferase probably assisted by a chromatin- or DNA-binding factor, and then allosteric activation depending on the interaction between Dnmt3a and the histone tails - the latter might serve as a checkpoint for the methylation activity.