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Diverse epigenetic regulatory mechanisms ensure and regulate cellular diversity. Among others, the histone 3 lysine 9 me3 (H3K9me3) post translational modification participates in silencing lineage-inappropriate genes. H3K9me3 restricts access of transcription factors and other regulatory proteins to cell-fate controlled genes. In mice, olfactory sensory neurons (OSN) express one olfactory receptor (OR) gene out of 2,600 possibilities. This monoallelic and stochastic OR choice happens as OSNs differentiate and undergo dramatic changes in nuclear architecture. OR genes from different chromosomes converge into specialized nuclear bodies and chromatin compartments as H3K9me3 and chromatin binding proteins including heterochromatin protein 1 (HP1) are incorporated. In this work, we have uncovered an unexpected role for HP1β in OR choice and neuronal identity that cannot be rescued by HP1α in vivo. With the use of a conditional knock-in mouse model that replaces HP1β for HP1α, we observe changes in H3K9me3 levels, DNA accessibility, and Hi-C contacts over OR gene clusters. These changes alter the expression patterns that partition the mouse olfactory epithelium into five OR expression zones, which results in a reduced OR repertoire leading to a loss of olfactory sensory neuron diversity. We propose that HP1β modulates the competition of OR-promoters for enhancers to promote receptor diversity, by establishing repression gradients in a zonal fashion.