Effective antiviral immunity depends on the ability of infected cells or cells triggered with virus-derived nucleic acids to produce type I interferon (IFN), which activates transcription of numerous antiviral genes. However, disproportionately strong or chronic IFN expression is a common cause of inflammatory and autoimmune diseases. We describe an epigenetic mechanism that determines cell type-specific differences in IFN and IFN-stimulated gene (ISG) expression in response to exogenous signals. We identify di-methylation of histone H3 at lysine 9 (H3K9me2) as a suppressor of IFN and IFN-inducible antiviral gene expression. We show that levels of H3K9me2 at IFN and ISG correlate inversely with the scope and amplitude of IFN and ISG expression in fibroblasts and dendritic cells. Accordingly, genetic ablation or pharmacological inactivation of lysine methyltransferase G9a, which is essential for the generation of H3K9me2, resulted in phenotypic conversion of fibroblasts into highly potent IFN-producing cells and rendered these cells resistant to pathogenic RNA viruses. In summary, our studies implicate H3K9me2 and enzymes controlling its abundance as key regulators of innate antiviral immunity.