Eukaryotic genomic DNA is orderly compacted to fit into the nucleus and to inhibit accessibility of specific sequences. DNA is manipulated in many different ways by bound RNA and proteins within the composite material known as chromatin. All of the biological processes that require access to genomic DNA (such as replication, recombination and transcription) therefore are dependent on the precise characteristics of chromatin in eukaryotes. This distinction underlies a fundamental property of eukaryotic versus prokaryotic gene regulation such that chromatin structure must be regulated to precisely repress or relieve repression of particular regions of the genome in an appropriate spatio-temporal manner. As well as playing a key role in structuring genomic DNA, histones are subject to site-specific modifications that can influence the organization of chromatin structure. This review examines the molecular processes regulating site-specific histone acetylation, methylation and phosphorylation with an emphasis on how these processes underpin differentiation-regulated transcription.