We have investigated the role of the histone methyltransferase G9a in the establishment of silent nuclear compartments. Following conditional knockout of the G9a methyltransferase in mouse ESCs, 167 genes were significantly up-regulated, and no genes were strongly down-regulated. A partially overlapping set of 119 genes were up-regulated after differentiation of G9a-depleted cells to neural precursors. Promoters of these G9a-repressed genes were AT rich and H3K9me2 enriched but H3K4me3 depleted and were not highly DNA methylated. Representative genes were found to be close to the nuclear periphery, which was significantly enriched for G9a-dependent H3K9me2. Strikingly, although 73% of total genes were early replicating, more than 71% of G9a-repressed genes were late replicating, and a strong correlation was found between H3K9me2 and late replication. However, G9a loss did not significantly affect subnuclear position or replication timing of any non-pericentric regions of the genome, nor did it affect programmed changes in replication timing that accompany differentiation. We conclude that G9a is a gatekeeper for a specific set of genes localized within the late replicating nuclear periphery.