Saccharomyces cerevisiae (budding yeast) and Schizosaccharomyces pombe (fission yeast) are two of the most recognized and well-studied model systems for epigenetic regulation and the inheritance of chromatin states. Their silent loci serve as a proxy for heterochromatic chromatin in higher eukaryotes, and as such both species have provided a wealth of information on the mechanisms behind the establishment and maintenance of epigenetic states, not only in yeast, but in higher eukaryotes. This review focuses specifically on the role of histone modifications in governing telomeric silencing in S. cerevisiae and centromeric silencing in S. pombe as examples of genetic loci that exemplify epigenetic inheritance. We discuss the recent advancements that for the first time provide a mechanistic understanding of how heterochromatin, dictated by histone modifications specifically, is preserved during S-phase. We also discuss the current state of our understanding of yeast nucleosome dynamics during DNA replication, an essential component in delineating the contribution of histone modifications to epigenetic inheritance.