Gene expression is regulated by DNA as well as histone modifications but the crosstalk and mechanistic link between these epigenetic signals are still poorly understood. Here we investigate the multi-domain protein Uhrf2 that is similar to Uhrf1, an essential cofactor of maintenance DNA methylation. Binding assays demonstrate a cooperative interplay of Uhrf2 domains that induces preference for hemimethylated DNA, the substrate of maintenance methylation, and enhances binding to H3K9me3 heterochromatin marks. FRAP analyses revealed that localization and binding dynamics of Uhrf2 in vivo require an intact tandem Tudor domain and depend on H3K9 trimethylation but not on DNA methylation. Besides the cooperative DNA and histone binding that is characteristic for Uhrf2, we also found an opposite expression pattern of uhrf1 and uhrf2 during differentiation. While uhrf1 is mainly expressed in pluripotent stem cells, uhrf2 is upregulated during differentiation and highly expressed in differentiated mouse tissues. Ectopic expression of Uhrf2 in uhrf1−/− embryonic stem cells did not restore DNA methylation at major satellites indicating functional differences. We propose that the cooperative interplay of Uhrf2 domains may contribute to a tighter epigenetic control of gene expression in differentiated cells. J. Cell. Biochem. 112: 2585–2593, 2011. © 2011 Wiley-Liss, Inc.