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Dysregulated epigenetic programs that restrict differentiation, reactivate fetal genes, and confer phenotypic plasticity are critical to colorectal cancer (CRC) development. By screening a small molecule library targeting epigenetic regulators using our dual reporter system, we found that inhibiting histone deacetylase (HDAC) 1/2 promotes CRC differentiation and anti-tumor activity. Comprehensive biochemical, chemical, and genetic experiments revealed that on-target blockade of the HDAC1/2 catalytic domain mediated the differentiated phenotype. Unbiased profiling of histone posttranslational modifications induced by HDAC1/2 inhibition nominated acetylation of specific histone lysine residues as potential regulators of differentiation. Genome-wide assessment of implicated marks indicated that H3K27ac gains at HDAC1/2-bound regions associated with open chromatin and upregulation of differentiation genes upon HDAC1/2 inhibition. Disrupting H3K27ac by degrading acetyltransferase EP300 rescued HDAC1/2 inhibitor-mediated differentiation of a patient-derived CRC model using single cell RNA-sequencing. Genetic screens revealed that DAPK3 contributes to CRC differentiation induced by HDAC1/2 inhibition. These results highlight the importance of specific chemically targetable histone modifications in governing cancer cell states and epigenetic reprogramming as a therapeutic strategy in CRC.