Transcriptional gene silencing controls transposons and other repetitive elements through RNA-directed DNA methylation (RdDM) and heterochromatin formation. A key component of the Arabidopsis RdDM pathway is ARGONAUTE4 (AGO4), which associates with siRNAs to mediate DNA methylation. Here, we show that AGO4 preferentially targets transposable elements embedded within promoters of protein-coding genes. This pattern of AGO4 binding cannot be simply explained by the sequences of AGO4-bound siRNAs; instead, AGO4 binding to specific gene promoters is also mediated by long non-coding RNAs (lncRNAs) produced by RNA polymerase V. lncRNA-mediated AGO4 binding to gene promoters directs asymmetric DNA methylation to these genomic regions and is involved in regulating the expression of targeted genes. Finally, AGO4 binding overlaps sites of DNA methylation affected by the biotic stress response. Based on these findings, we propose that the targets of AGO4-directed RdDM are regulatory units responsible for controlling gene expression under specific environmental conditions.