Precise regulation of the chromatin environment through post-translational histone modification modulates transcription and controls brain development. Not surprisingly, mutations in a large number of histone-modifying enzymes underlie complex brain disorders. In particular, the histone methyltransferase ASH1L modifies histone marks linked to transcriptional activation and has been implicated in multiple neuropsychiatric disorders. However, the mechanisms underlying the pathobiology of ASH1L-asociated disease remain underexplored. We generated human isogenic stem cells with a mutation in ASH1L's catalytic domain. We find that ASH1L dysfunction results in reduced neurite outgrowth, which correlates with alterations in the chromatin profile of activating and repressive histone marks, as well as the dysregulation of gene programs important for neuronal structure and function implicated in neuropsychiatric disease. We also identified a novel regulatory node implicating both the SP and Krüppel -like families of transcription factors and ASH1L relevant to human neuronal development. Finally, we rescue cellular defects linked to ASH1L dysfunction by leveraging two independent epigenetic mechanisms that promote transcriptional activation. In summary, we identified an ASH1L-driven epigenetic and transcriptional axis essential for human brain development and complex brain disorders that provide insights into future therapeutic strategies for ASH1L-related disorders.