The autoimmune regulator (AIRE) induces the transcription of thousands of peripheral tissue genes (PTGs) in thymic epithelial cells (TECs) to mediate immunological tolerance. The chromatin state required for optimal AIRE function in TECs and how this state is induced remains unclear. We tested the role of the histone acetyltransferase, KAT7 (also known as HBO1 or MYST2), which is essential for acetylation of histone 3 lysine 14, in TEC differentiation, AIRE-mediated PTG expression, and thymic tolerance. We find that KAT7 is required for optimal expansion of medullary TEC and has a major role in the expression of AIRE-dependent PTGs, associated with enhanced chromatin accessibility at these gene loci in TECs. Mice with TEC-specific Kat7 deletion develop organ-specific autoimmunity with features resembling those observed in Aire-deficient mice. These findings highlight critical roles for KAT7-mediated acetylation in promoting a chromatin state at PTG loci that enables AIRE function and the establishment of immunological tolerance.