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Background  The  Chromomethylase 1  ( CMT1 ) has long been considered a nonessential gene because, in certain  Arabidopsis  ecotypes, the  CMT1  gene is disrupted by the Evelknievel (EK) retroelement, inserted within exon 13, or contains frameshift mutations, resulting in a truncated, non-functional protein. In contrast to other transposable elements, no transcriptional activation of EK was observed under stress conditions (e.g., protoplasting).    Results  We wanted to explore the regulatory pathway responsible for EK silencing in the Ler ecotype and its effect on CMT1 transcription. Methylome databases confirmed that EK retroelement is heavily methylated and methylation is extended toward  CMT1  downstream region. Strong transcriptional activation of EK accompanied by significant reduction in non-CG methylation was found in  cmt3  and  kyp2 , but not in  ddm1  or RdDM mutants. EK activation in  cmt3  and  kyp2  did not interfere with upstream  CMT1  expression but abolish transcription through the EK. We identified, in wild-type Ler, three spliced variants in which the entire EK is spliced out; one variant (25% of splicing incidents) facilitates proper reconstitution of an intact  CMT1  mRNA. We could recover very low amount of the full-length  CMT1  mRNA from WT Ler and Col, but not from  cmt3  mutant.    Conclusions  Our findings highlight CMT3-SUVH4/KYP as the major pathway silencing the intragenic EK via inducing non-CG methylation. Furthermore, retroelement insertion within exons (e.g.,  CMT1 ) may not lead to a complete abolishment of the gene product when the element is kept silent. Rather the element can be spliced out to bring about reconstruction of an intact, functional mRNA and possibly retrieval of an active protein.    Electronic supplementary material  The online version of this article (10.1186/s13072-018-0240-y) contains supplementary material, which is available to authorized users.

CMT3 and SUVH4/KYP silence the exonic Evelknievel retroelement to allow for reconstitution of CMT1 mRNA