Metazoan nucleosomes harboring H3K79 methylation (H3K79me) deposited by the methyltransferase DOT1L (disruptor of telomeric silencing 1-like) decorate actively transcribed genes. While DOT1L regulates transcription and the pathogenesis of leukemia and neurological disorders, the role of H3K79me remains elusive. Here, we reveal a functional synergism between H3K79me and H3K36 trimethylation (H3K36me3) in regulating gene expression and cellular differentiation. Simultaneous catalytic inactivation of DOT1L and the H3K36 methyltransferase SETD2 (SET domain containing 2) leads to hyperactive transcription and failures in neural differentiation. H3K79me/H3K36me3 loss causes increased transcription elongation, gained chromatin accessibility at a group of enhancers, and increased recruitment of TEAD4 (TEA domain transcription factor 4) and its coactivator YAP1 (Yes-associated protein 1) to these enhancers. Furthermore, YAP-TEAD inhibition restores the expression levels of genes hyperactivated by H3K79me/H3K36me3 loss. Together, we demonstrate a synergism of H3K79me and H3K36me3 in regulating transcription and cell fate transition, unveil the underlying mechanisms, and provide insight into targeting diseases driven by misregulation/mutations of DOT1L and/or SETD2.