In genetic hybrids, the silencing of nucleolar rRNA genes inherited from one progenitor is the epigenetic phenomenon known as nucleolar dominance. An RNAi knockdown screen identified the Arabidopsis de novo cytosine methyltransferase, DRM2, and the methylcytosine binding domain proteins, MBD6 and MBD10, as activities required for nucleolar dominance. MBD10 localizes throughout the nucleus, but MBD6 preferentially associates with silenced rRNA genes and does so in a DRM2-dependent manner. DRM2 methylation is thought to be guided by siRNAs whose biogenesis requires RNA-DEPENDENT RNA POLYMERASE 2 (RDR2) and DICER-LIKE 3 (DCL3). Consistent with this hypothesis, knockdown of DCL3 or RDR2 disrupts nucleolar dominance. Collectively, these results indicate that in addition to directing the silencing of retrotransposons and noncoding repeats, siRNAs specify de novo cytosine methylation patterns that are recognized by MBD6 and MBD10 in the large-scale silencing of rRNA gene loci.