DNA methyltransferase (cytosine-5) 1 (Dnmt1) is the principal enzyme responsible for maintenance of CpG methylation and is essential for the regulation of gene expression, silencing of parasitic DNA elements, genomic imprinting and embryogenesis^,,,. Dnmt1 is needed in S phase to methylate newly replicated CpGs occurring opposite methylated ones on the mother strand of the DNA, which is essential for the epigenetic inheritance of methylation patterns in the genome. Despite an intrinsic affinity of Dnmt1 for such hemi-methylated DNA, the molecular mechanisms that ensure the correct loading of Dnmt1 onto newly replicated DNA in vivo are not understood. The Np95 (also known as Uhrf1 and ICBP90) protein binds methylated CpG through its SET and RING finger-associated (SRA) domain. Here we show that localization of mouse Np95 to replicating heterochromatin is dependent on the presence of hemi-methylated DNA. Np95 forms complexes with Dnmt1 and mediates the loading of Dnmt1 to replicating heterochromatic regions. By using Np95-deficient embryonic stem cells and embryos, we show that Np95 is essential in vivo to maintain global and local DNA methylation and to repress transcription of retrotransposons and imprinted genes. The link between hemi-methylated DNA, Np95 and Dnmt1 thus establishes key steps of the mechanism for epigenetic inheritance of DNA methylation.