In the yeast Saccharomyces cerevisiae, the establishment and maintenance of silent chromatin at the telomere requires a delicate balance between opposing activities of histone modifying enzymes. Previously, we demonstrated that the protein arginine methyltransferase Hmt1 plays a role in the formation of yeast silent chromatin. To better understand the nature of the Hmt1 interactions that contribute to this phenomenon, we carried out a systematic reverse genetic screen using a null allele of HMT1 and the synthetic genetic array (SGA) methodology. This screen revealed interactions between HMT1 and genes encoding components of the histone deacetylase complex Rpd3L (large). A double mutant carrying both RPD3 and HMT1 deletions display increased telomeric silencing and Sir2 occupancy at the telomeric boundary regions, when comparing to a single mutant carrying Hmt1-deletion only. However, the dual rpd3/hmt1-null mutant behaves like the rpd3-null single mutant with respect to silencing behavior, indicating that RPD3 is epistatic to HMT1. Mutants lacking either Hmt1 or its catalytic activity display an increase in the recruitment of histone deacetylase Rpd3 to the telomeric boundary regions. Moreover, in such loss-of-function mutants the levels of acetylated H4K5, which is a substrate of Rpd3, are altered at the telomeric boundary regions. In contrast, the level of acetylated H4K16, a target of the histone deacetylase Sir2, was increased in these regions. Interestingly, mutants lacking either Rpd3 or Sir2 display various levels of reduction in dimethylated H4R3 at these telomeric boundary regions. Together, these data provide insight into the mechanism whereby Hmt1 promotes the proper establishment and maintenance of silent chromatin at the telomeres.