Protection of euchromatin from invasion by gene-repressive heterochromatin is critical for cellular health and viability. In addition to constitutive loci such as pericentromeres and subtelomeres, heterochromatin can be found interspersed in gene-rich euchromatin, where it regulates gene expression pertinent to cell fate. While heterochromatin and euchromatin are globally poised for mutual antagonism, the mechanisms underlying precise spatial encoding of heterochromatin containment within euchromatic sites remain opaque. We investigated ectopic heterochromatin invasion by manipulating the fission yeast mating type locus boundary using a single-cell spreading reporter system. We found that heterochromatin repulsion is locally encoded by Set1/COMPASS on certain actively transcribed genes and that this protective role is most prominent at heterochromatin islands, small domains interspersed in euchromatin that regulate cell fate specifiers. Sensitivity to invasion by heterochromatin, surprisingly, is not dependent on Set1 altering overall gene expression levels. Rather, the gene-protective effect is strictly dependent on Set1s catalytic activity. H3K4 methylation, the Set1 product, antagonizes spreading in two ways: directly inhibiting catalysis by Suv39/Clr4 and locally disrupting nucleosome stability. Taken together, these results describe a mechanism for spatial encoding of euchromatic signals that repel heterochromatin invasion.