Epigenetic repression often involves covalent histone modifications. Yet, how the presence of a histone mark translates into changes in chromatin structure that ultimately benefits the repression is largely unclear. Polycomb group proteins comprise a family of evolutionarily conserved epigenetic repressors. They act as multi-subunit complexes one of which tri-methylates histone H3 at Lysine 27 (H3K27). Here we describe a novel Monte Carlo–Molecular Dynamics simulation framework, which we employed to discover that stochastic interaction of Polycomb Repressive Complex 1 (PRC1) with tri-methylated H3K27 is sufficient to fold the methylated chromatin. Unexpectedly, such chromatin folding leads to spatial clustering of the DNA elements bound by PRC1. Our results provide further insight into mechanisms of epigenetic repression and the process of chromatin folding in response to histone methylation.