The human Immunodeficiency Centromeric Instability Facial Anomalies (ICF) 4 syndrome is a severe disease with increased mortality caused by mutation in the LSH gene. Although LSH belongs to a family of chromatin remodeling proteins, it remains unknown how LSH mediates its function on chromatin in vivo. Here, we use chemical-induced proximity to rapidly recruit LSH to an engineered locus and find that LSH specifically induces macroH2A1.2 and macroH2A2 deposition in an ATP-dependent manner. Tethering of LSH induces transcriptional repression and silencing is dependent on macroH2A deposition. Loss of LSH decreases macroH2A enrichment at repeat sequences and results in transcriptional reactivation. Likewise, reduction of macroH2A by siRNA interference mimicks transcriptional reactivation. ChIP-seq analysis confirmed that LSH is a major regulator of genome-wide macroH2A distribution. Tethering of ICF4 mutations fails to induce macroH2A deposition and ICF4 patient cells display reduced macroH2A deposition and transcriptional reactivation supporting a pathogenic role for altered marcoH2A deposition. We propose that LSH is a major chromatin modulator of the histone variant macroH2A and that its ability to insert marcoH2A into chromatin and transcriptionally silence is disturbed in the ICF4 syndrome.