Animal cells have a remarkable capacity to adopt durable and heritable gene expression programs or epigenetic states that define the physical properties and diversity of somatic cell types. The maintenance of epigenetic programs depends on poorly understood pathways that prevent gain or loss of inherited signals. In the germline, epigenetic factors are enriched in liquid-like perinuclear condensates called nuage. Here, we identify the deeply conserved helicase-domain protein, ZNFX-1, as an epigenetic regulator and component of nuage that interacts with Argonaute systems to balance epigenetic inheritance. Our findings suggest that ZNFX-1 promotes the 3′ recruitment of machinery that propagates the small RNA epigenetic signal and thus counteracts a tendency for Argonaute targeting to shift 5′ along the mRNA. These functional insights support the idea that recently identified subdomains of nuage, including ZNFX-1 granules or “Z-granules,” may define spatial and temporal zones of molecular activity during epigenetic regulation. Display omitted •Genetic identification of ZNFX-1, a conserved epigenetic inheritance factor•ZNFX-1 balances the transgenerational inheritance of epigenetic information•ZNFX-1 interacts with RdRP and three distinct Argonaute systems in germline nuage•ZNFX-1 promotes balanced amplification of small RNA signals along germline mRNAs Ishidate et al. identify ZNFX-1, a highly conserved helicase protein, as a factor required for epigenetic inheritance in C. elegans. Their findings indicate that ZNFX-1 localizes within nuage, where it interacts with Argonaute systems and RNA-dependent RNA polymerase (RdRP) to ensure balanced amplification of small RNA signals along germline mRNAs.