We have previously reported that carcinogenic nickel compounds decreased global histone H4 acetylation and silenced the gpt transgene in G12 Chinese hamster cells. However, the nature of this silencing is still not clear. Here, we report that nickel ion exposure increases global H3K9 mono- and dimethylation, both of which are critical marks for DNA methylation and long-term gene silencing. In contrast to the up-regulation of global H3K9 dimethylation, nickel ions decreased the expression and activity of histone H3K9 specific methyltransferase G9a. Further investigation demonstrated that nickel ions interfered with the removal of histone methylation in vivo and directly decreased the activity of a Fe(II)-2-oxoglutarate-dependent histone H3K9 demethylase in nuclear extract in vitro. These results are the first to show a histone H3K9 demethylase activity dependent on both iron and 2-oxoglutarate. Exposure to nickel ions also increased H3K9 dimethylation at the gpt locus in G12 cells and repressed the expression of the gpt transgene. An extended nickel ion exposure led to increased frequency of the gpt transgene silencing, which was readily reversed by treatment with DNA-demethylating agent 5-aza-2'-deoxycytidine. Collectively, our data strongly indicate that nickel ions induce transgene silencing by increasing histone H3K9 dimethylation, and this effect is mediated by the inhibition of H3K9 demethylation.