Approximately 70% of KRAS-positive colorectal cancers (CRCs) have a CpG island methylator phenotype (CIMP) characterized by aberrant DNA hypermethylation and transcriptional silencing of many genes. The factors involved in, and the mechanistic basis of, CIMP is not understood. Among the CIMP genes are the tumor suppressors p14(ARF), p15(INK4B), and p16(INK4A), encoded by the INK4-ARF locus. In this study, we perform an RNA interference screen and identify ZNF304, a zinc-finger DNA-binding protein, as the pivotal factor required for INK4-ARF silencing and CIMP in CRCs containing activated KRAS. In KRAS-positive human CRC cell lines and tumors, ZNF304 is bound at the promoters of INK4-ARF and other CIMP genes. Promoter-bound ZNF304 recruits a corepressor complex that includes the DNA methyltransferase DNMT1, resulting in DNA hypermethylation and transcriptional silencing. KRAS promotes silencing through upregulation of ZNF304, which drives DNA binding. Finally, we show that ZNF304 also directs transcriptional silencing of INK4-ARF in human embryonic stem cells. DOI: http://dx.doi.org/10.7554/eLife.02313.001.