A large number of circular RNAs (circRNAs) have been found in different organisms; however, their function in the regulation of histone modification remains unknown. In this study, we found that the circRNA circEgg, cyclized by the 9th-13th exon of Bombyx mori histone-lysine N-methyltransferase eggless (BmEgg) gene, mainly distributes in the cytoplasm, its expression levels changed with silkworm developmental stages, and the linear transcript level of the BmEgg gene was decreased when circEgg was overexpressed. Moreover, circEgg was found to repress histone H3 lysine 9 methylation (H3K9me3), promote histone H3 lysine 9 acetylation (H3K9ac), and positively regulate histone deacetylase (HDAC) Rpd3 (BmHDAC Rpd3) gene expression by sponging the microRNA bmo-miR-3391-5p. Furthermore, circEgg encodes a circEgg-P122 protein which appears to inhibit H3K9me3. These results suggest that circEgg regulates histone modification by sponging bmo-miR-3391-5p and encoding circEgg-P122 protein. To our knowledge, this is the first report showing that a circRNA produced by BmEgg plays an important role in histone epigenetic modification.