Insulators functionally separate active chromatin domains from inactive ones. The insulator factor, CTCF, has been found to bind to boundaries and to mediate insulator function. CTCF binding sites are depleted for the histone modification H3K27me3 and are enriched for the histone variant H3.3. In order to determine whether demethylation of H3K27me3 and H3.3 incorporation are a requirement for CTCF binding at domain boundaries or whether CTCF causes these changes, we made use of the Lacl DNA binding domain to control CTCF binding by the Lac inducer IPTG. Here we show that, in contrast to the related factor CTCFL, the N-terminus plus zinc finger domain of CTCF is sufficient to open compact chromatin rapidly. This is preceded by incorporation of the histone variant H3.3, which thereby removes the H3K27me3 mark. This demonstrates the causal role for CTCF in generating the chromatin features found at insulators. Thereby, spreading of a histone modification from one domain through the insulator into the neighbouring domain is inhibited.