Members of the KMT2C/D-KDM6A complex are recurrently mutated in urothelial carcinoma and in histologically normal urothelium. Here, using genetically engineered mouse models, we demonstrate that Kmt2c/d knockout in the urothelium led to impaired differentiation, augmented responses to growth and inflammatory stimuli and sensitization to oncogenic transformation by carcinogen and oncogenes. Mechanistically, KMT2D localized to active enhancers and CpG-poor promoters that preferentially regulate the urothelial lineage program and Kmt2c/d knockout led to diminished H3K4me1, H3K27ac and nascent RNA transcription at these sites, which leads to impaired differentiation. Kmt2c/d knockout further led to KMT2A-menin redistribution from KMT2D localized enhancers to CpG-high and bivalent promoters, resulting in derepression of signal-induced immediate early genes. Therapeutically, Kmt2c/d knockout upregulated epidermal growth factor receptor signaling and conferred vulnerability to epidermal growth factor receptor inhibitors. Together, our data posit that functional loss of Kmt2c/d licenses a molecular 'field effect' priming histologically normal urothelium for oncogenic transformation and presents therapeutic vulnerabilities.