NUT midline carcinoma (NMC) belongs to a class of highly lethal and poorly differentiated epithelial cancers arising mainly in human midline organs. NMC is caused by the chromosome translocation-mediated fusion of the NUT (nuclear protein in testis) gene on chromosome 15 to a few other genes, most frequently the BRD4 gene on chromosome 19. The mechanism by which the BRD4-NUT fusion product blocks NMC cellular differentiation and contributes to oncogenesis remains elusive. In this study, we show that BRD4-NUT and BRD4 colocalize in discrete nuclear foci that are hyperacetylated but transcriptionally inactive. BRD4-NUT recruits histone acetyltransferases to induce histone hyperacetylation in these chromatin foci, which provide docking sites for accumulation of additional BRD4 and associated P-TEFB (positive transcription elongation factor b) complexes in the transcriptionally inactive BRD4-NUT foci. These molecular events lead to repression of a BRD4·P-TEFB downstream target gene c-fos, a component of activator protein 1 (AP-1), that directly regulates epithelial differentiation. Knockdown of BRD4-NUT in NMC cells disperses the transcriptionally inactive chromatin foci and releases the transcriptional activators to stimulate c-fos expression, leading to restoration of cellular differentiation. Our study provides a novel mechanism by which the BRD4-NUT oncogene perturbs BRD4 functions to block cellular differentiation and to contribute to the oncogenic progression in the highly aggressive NMC.