Chromatin plays a critical role in faithful implementation of gene expression programs. Different post-translational modifications (PTMs) of histone proteins reflect the underlying state of gene activity, and many chromatin proteins write, erase, bind, or are repelled by, these histone marks. One such protein is UpSET, the Drosophila homolog of yeast Set3 and mammalian KMT2E (MLL5). Here, we show that UpSET is necessary for the proper balance between active and repressed states. Using CRISPR/Cas-9 editing, we generated S2 cells that are mutant for upSET We found that loss of UpSET is tolerated in S2 cells, but that heterochromatin is misregulated, as evidenced by a strong decrease in H3K9me2 levels assessed by bulk histone PTM quantification. To test whether this finding was consistent in the whole organism, we deleted the upSET coding sequence using CRISPR/Cas-9, which we found to be lethal in both sexes in flies. We were able to rescue this lethality using a tagged upSET transgene, and found that UpSET protein localizes to transcriptional start sites (TSS) of active genes throughout the genome. Misregulated heterochromatin is apparent by suppressed position effect variegation of the w(m4) allele in heterozygous upSET-deleted flies. Using nascent-RNA sequencing in the upSET-mutant S2 lines, we show that this result applies to heterochromatin genes generally. Our findings support a critical role for UpSET in maintaining heterochromatin, perhaps by delimiting the active chromatin environment.