The evolution of the first body axis in the animal kingdom and its extensive ability to regenerate makesHydra, a Cnidarian, an excellent model system for understanding the underlying epigenetic mechanisms. We identify that monomethyltransferase SETD8 is critical for regeneration inHydrabecause of its conserved interaction with β-catenin to fine-tune the associated gene regulatory network. Inhibition of SETD8 activity abolishes head and foot regeneration inHydra. Furthermore, we show that H4K20me1, the histone mark imparted by SETD8, colocalizes with the transcriptional activation machinery locally at the β-catenin-bound TCF/LEF-binding sites on the promoters of head-associated genes, marking an epigenetic activation mode. In contrast, genome-wide analysis of the H4K20me1 occupancy revealed a negative correlation with transcriptional activation. We propose that H4K20me1 acts as a general repressive histone mark in Cnidaria and describe its dichotomous role in transcriptional regulation inHydra.