Nucleosomes are the basic unit of chromatin that help the packaging of genetic material while controlling access to the genetic information. The underlying DNA sequence, together with transcription-associated proteins and chromatin remodelling complexes, are important factors that influence the organization of nucleosomes. Here, we show that the naturally occurring DNA modification, 5-formylcytosine (5fC) is linked to tissue-specific nucleosome organization. Our study reveals that 5fC is associated with increased nucleosome occupancy in vitro and in vivo. We demonstrate that 5fC-associated nucleosomes at enhancers in the mammalian hindbrain and heart are linked to elevated gene expression. Our study also reveals the formation of a reversible-covalent Schiff base linkage between lysines of histone proteins and 5fC within nucleosomes in a cellular environment. We define their specific genomic loci in mouse embryonic stem cells and look into the biological consequences of these DNA-histone Schiff base sites. Collectively, our findings show that 5fC is a determinant of nucleosome organization and plays a role in establishing distinct regulatory regions that control transcription.