Posttranslational histone modifications are important for gene regulation, yet the mode of propagation and the contribution to heritable gene expression states remains controversial. To address these questions, we developed a chromatin in vivo assay (CiA) system employing chemically induced proximity to initiate and terminate chromatin modifications in living cells. We selectively recruited HP1α to induce H3K9me3-dependent gene silencing and describe the kinetics and extent of chromatin modifications at the Oct4 locus in fibroblasts and pluripotent cells. H3K9me3 propagated symmetrically and continuously at average rates of ~0.18 nucleosomes/hr to produce domains of up to 10 kb. After removal of the HP1α stimulus, heterochromatic domains were heritably transmitted, undiminished through multiple cell generations. Our data enabled quantitative modeling of reaction kinetics, which revealed that dynamic competition between histone marking and turnover, determines the boundaries and stability of H3K9me3 domains. This framework predicts the steady-state dynamics and spatial features of the majority of euchromatic H3K9me3 domains over the genome.