Histone H3K4 methylation is connected to gene transcription from yeast to humans, but its mechanistic roles in transcription and chromatin dynamics remain poorly understood. We investigated the functions for Set1 and Jhd2, the sole H3K4 methyltransferase and H3K4 demethylase, respectively, in S. cerevisiae. Here, we show that Set1 and Jhd2 predominantly co-regulate genome-wide transcription. We find combined activities of Set1 and Jhd2 via H3K4 methylation contribute to positive or negative transcriptional regulation. Providing mechanistic insights, our data reveal that Set1 and Jhd2 together control nucleosomal turnover and occupancy during transcriptional co-regulation. Moreover, we find a genome-wide co-regulation of chromatin structure by Set1 and Jhd2 at different groups of transcriptionally active or inactive genes and at different regions within yeast genes. Overall, our study puts forth a model wherein combined actions of Set1 and Jhd2 via modulating H3K4 methylation-demethylation together control chromatin dynamics during various facets of transcriptional regulation.