Updated project metadata. Chromatin complexes control a vast number of epigenetic developmental processes. Filamentous fungi present an important clade of microbes with poor understanding of underlying epigenetic mechanisms. Here, we describe a chromatin binding complex in the fungus Aspergillus nidulans composing of a H3K4 histone demethylase KdmB, a cohesin acetyltransferase (EcoA), a histone deacetylase (RpdA) and a histone reader/E3 ligase protein (SntB). In vitro and in vivo evidence demonstrate that this KERS complex is assembled from the EcoA-KdmB and SntB-RpdA heterodimers. KdmB and SntB play opposing roles in regulating the cellular levels and stability of EcoA, as KdmB prevents SntB-mediated degradation of EcoA. The KERS complex is recruited to transcription initiation start sites at active core promoters exerting promoter-specific transcriptional effects. Interestingly, deletion of any one of the KERS subunits results in a common negative effect on morphogenesis and production of secondary metabolites, molecules important for niche securement in filamentous fungi. Consequently, the entire mycotoxin sterigmatocystin gene cluster is downregulated and asexual development is reduced in the four KERS mutants. The elucidation of the recruitment of epigenetic regulators to chromatin via the KERS complex provides the first mechanistic, chromatin-based understanding of how development is connected with small molecule synthesis in fungi.