The regulation of higher-order chromatin structure is complex and dynamic, and a full understanding of the suite of mechanisms governing this architecture is lacking. Here, we reveal the noncanonical SMC protein Smchd1 to be a novel regulator of long-range chromatin interactions in mice, and we add Smchd1 to the canon of epigenetic proteins required for Hox-gene regulation. The effect of losing Smchd1-dependent chromatin interactions has varying outcomes that depend on chromatin context. At autosomal targets transcriptionally sensitive to Smchd1 deletion, we found increased short-range interactions and ectopic enhancer activation. In contrast, the inactive X chromosome was transcriptionally refractive to Smchd1 ablation, despite chromosome-wide increases in short-range interactions. In the inactive X, we observed spreading of trimethylated histone H3 K27 (H3K27me3) domains into regions not normally decorated by this mark. Together, these data suggest that Smchd1 is able to insulate chromatin, thereby limiting access to other chromatin-modifying proteins.