The capacity of hematopoietic stem cells (HSC) to generate B lymphocytes declines with age, contributing to impaired immune function in the elderly. Here we show that the histone methyltransferase SUV39H1 plays an important role in human B lymphoid differentiation and that expression of SUV39H1 decreases with age in both human and mouse HSC, leading to a global reduction in H3K9 trimethylation and perturbed heterochromatin function. Further, we demonstrate that SUV39H1 is a target of microRNA miR-125b, a known regulator of HSC function, and that expression of miR-125b increases with age in human HSC. Overexpression of miR-125b and inhibition of SUV39H1 in young HSC induced loss of B cell potential. Conversely, both inhibition of miR-125 and enforced expression of SUV39H1 improved the capacity of HSC from elderly individuals to generate B cells. Our findings highlight the importance of heterochromatin regulation in HSC aging and B lymphopoiesis.