The fate and function of epigenetic marks during the germline-to-embryo transition is a key issue in developmental biology, with relevance to stem cell programming and trans-generational inheritance. In zebrafish, DNA methylation (DNAme) patterns are programmed in transcriptionally-quiescent cleavage embryos; remarkably, paternally-inherited patterns are maintained, whereas maternal patterns are reprogrammed to match the paternal. Here we provide the mechanism, by demonstrating that ‘Placeholder’ nucleosomes, containing histone H2A variant H2A.Z(FV) and H3K4me1, occupy virtually all regions lacking DNAme in both sperm and cleavage embryos, and resides at promoters encoding housekeeping and early embryonic transcription factors. Upon genome-wide transcriptional onset, genes with Placeholder become either active (H3K4me3) or silent (H3K4me3/K27me3). Importantly, functional perturbation causing Placeholder loss confers DNAme accumulation, whereas acquisition/expansion of Placeholder confers DNA hypomethylation and improper gene activation. Thus, during transcriptionally-quiescent gametic and embryonic stages, an H2A.Z(FV)/H3K4me1-containing Placeholder nucleosome deters DNAme, poising parental genes for either gene-specific activation or facultative repression.Highlights: four, 85 characters eachPlaceholder nucleosomes bear H3K4me and the histone variant H2A.Z(FV)Placeholders occupy all DNA hypomethylated loci in zebrafish sperm and early embryosAt ZGA, Placeholders resolve into either active or poised (bivalent) nucleosomesPlaceholder localization excludes DNAme, and regulates embryonic transcription