Compacted, transcriptionally repressed chromatin, referred to as heterochromatin, represents a major fraction of the higher eukaryotic genome and exerts pivotal functions of silencing repetitive elements, maintenance of genome stability, and control of gene expression. Among the different histone post-translational modifications (PTMs) associated with heterochromatin, tri-methylation of lysine 9 on histone H3 (H3K9me3) is gaining increased attention. Besides its known role in repressing repetitive elements and non-coding portions of the genome, recent observations indicate H3K9me3 as an important player in silencing lineage-inappropriate genes. The ability of H3K9me3 to influence cell identity challenges the original concept of H3K9me3-marked heterochromatin as mainly a constitutive type of chromatin and provides a further level of understanding of how to modulate cell fate control. Here, we summarize the role of H3K9me3 marked heterochromatin and its dynamics in establishing and maintaining cellular identity.