Diffuse midline gliomas (DMGs) carrying the H3.3 K27M mutation are defined by profound differentiation failure, and the molecular mechanisms underlying this defect are currently unclear. We wanted to understand exactly how the H3.3 K27M mutation disrupts neural differentiation, so we engineered mouse embryonic stem (ES) cells carrying a single H3.3 K27M allele and induced differentiation along neural lineages in vitro to observe the effects of K27M in isolation. We found that a single copy of H3.3 K27M was sufficient to arrest neural differentiation at the progenitor stage. This was accompanied by a complete failure to form H3K9me3-rich chromocenters, a key feature of pericentric heterochromatin. Chromatin profiling identified the H3K9me3 demethylase KDM4B as a central factor in these defects. We found that KDM4B localises to H3.3 K27me3-marked promoters in normal cells, and is redistributed in H3.3 K27M mutant cells, removing H3K9me3 from pericentromeric regions and disrupting heterochromatin formation. Knockout of KDM4B restored chromocenters and enabled neural differentiation, confirming that aberrant KDM4B activity blocks this process. Mechanistically, we found H3.3 K27M prevents phosphorylation of serine 31 (H3.3 S31ph), a modification that normally inhibits KDM4B. Introducing a phosphomimetic H3.3 S31E mutant restored both chromocenters and neuronal differentiation in ES cells and patient-derived DIPG lines. Together, these results show that loss of H3.3 S31 phosphorylation links the K27M mutation to KDM4B misregulation and heterochromatin collapse. This provides a mechanistic explanation for differentiation failure in DMG and highlights a potential therapeutic vulnerability.