Here, we identified the imprinted mesoderm-specific transcript (MEST) gene as an endogenous TIF1beta primary target gene and demonstrated that transcriptional intermediary factor (TIF) 1beta, through its interaction with heterochromatin protein (HP) 1, is essential in establishing and maintaining a local heterochromatin-like structure on MEST promoter region characterized by H3K9 trimethylation and hypoacetylation, H4K20 trimethylation, DNA hypermethylation, and enrichment in HP1 that correlates with preferential association to foci of pericentromeric heterochromatin and transcriptional repression. On disruption of the interaction between TIF1beta and HP1, TIF1beta is released from the promoter region, and there is a switch from DNA hypermethylation and histone H3K9 trimethylation to DNA hypomethylation and histone H3K27 trimethylation correlating with rapid reactivation of MEST expression. Interestingly, we provide evidence that the imprinted MEST allele DNA methylation is insensitive to TIF1beta loss of function, whereas the nonimprinted allele is regulated through a distinct TIF1beta-DNA methylation mechanism.