Much of boundary formation during development remains to be understood, despite being a defining feature of many animal taxa. Axial patterning of Hydra, a member of the ancient phylum Cnidaria which diverged prior to the bilaterian radiation, involves a steady-state of production and loss of tissue, and is dependent on an organizer located in the upper part of the head. We show that the sharp boundary separating tissue in the body column from head and foot tissue depends on histone acetylation. Histone deacetylation disrupts the boundary by affecting numerous developmental genes including Wnt components and prevents stem cells from entering the position dependent differentiation program. Overall, our results suggest that reversible histone acetylation is an ancient regulatory mechanism for partitioning the body axis into domains with specific identity, which was present in the common ancestor of cnidarians and bilaterians, at least 600 million years ago.