The segregation of the genome into accessible euchromatin and histone H3K9-methylated heterochromatin helps silence repetitive elements and tissue-specific genes. In <i>Caenorhabditis elegans</i>, MET-2, the homologue of mammalian SETDB1, catalyzes H3K9me1 and
me2, yet like SETDB1, its regulation is enigmatic. Contrary to the cytosolic enrichment of overexpressed MET-2, we show that endogenous MET-2 is nuclear throughout development, forming perinuclear foci in a cell cycle-dependent manner. Mass spectrometry identified two cofactors that bind MET-2: LIN-65, a highly unstructured protein, and ARLE-14, a conserved GTPase effector. All three factors colocalize in heterochromatic foci. Ablation of <i>
lin-65</i>, but not <i>
arle-14</i>, mislocalizes and destabilizes MET-2, resulting in decreased H3K9 dimethylation, dispersion of heterochromatic foci, and derepression of MET-2 targets. Mutation of <i>
met-2</i> or <i>
lin-65</i> also disrupts the perinuclear anchoring of genomic heterochromatin. Loss of LIN-65, like that of MET-2, compromises temperature stress resistance and germline integrity, which are both linked to promiscuous repeat transcription and gene expression.