Background The organization of higher order chromatin is an emerging epigenetic mechanism for understanding development and disease. We and others have previously observed dynamic changes during differentiation and oncogenesis in large heterochromatin domains such as Large Organized Chromatin K (lysine) modifications (LOCKs), of histone H3 lysine-9 dimethylation (H3K9me2) or other repressive histone posttranslational modifications. The microstructure of these regions has not previously been explored. Results We analyzed the genome-wide distribution of H3K9me2 in two human pluripotent stem cell lines and three differentiated cells lines. We identified > 2,500 small regions with very low H3K9me2 signals in the body of LOCKs, which were termed as euchromatin islands (EIs). EIs are 6.5-fold enriched for DNase I Hypersensitive Sites and 8-fold enriched for the binding of CTCF, the major organizer of higher-order chromatin. Furthermore, EIs are 2–6 fold enriched for differentially DNA-methylated regions associated with tissue types (T-DMRs), reprogramming (R-DMRs) and cancer (C-DMRs). Gene ontology (GO) analysis suggests that EI-associated genes are functionally related to organ system development, cell adhesion and cell differentiation. Conclusions We identify the existence of EIs as a finer layer of epigenomic architecture within large heterochromatin domains. Their enrichment for CTCF sites and DNAse hypersensitive sites, as well as association with DMRs, suggest that EIs play an important role in normal epigenomic architecture and its disruption in disease.