The developmental role of histone H3K9 methylation (H3K9me), which typifies heterochromatin, remains unclear. In Caenorhabditis elegans, loss of H3K9me leads to a highly divergent upregulation of genes with tissue and developmental-stage specificity. During development H3K9me is lost from differentiated cell type-specific genes and gained at genes expressed in earlier developmental stages or other tissues. The continuous deposition of H3K9me2 by the SETDB1 homolog MET-2 after terminal differentiation is necessary to maintain repression. In differentiated tissues, H3K9me ensures silencing by restricting the activity of a defined set of transcription factors at promoters and enhancers. Increased chromatin accessibility following the loss of H3K9me is neither sufficient nor necessary to drive transcription. Increased ATAC-seq signal and gene expression correlate at a subset of loci positioned away from the nuclear envelope, while derepressed genes at the nuclear periphery remain poorly accessible despite being transcribed. In conclusion, H3K9me deposition can confer tissue-specific gene expression and maintain the integrity of terminally differentiated muscle by restricting transcription factor activity.