Expression of one out of >1000 olfactory receptor (OR) genes is stochastic but, yet, spatially organized in stereotypic anatomical zones of the olfactory epithelium. We discovered that transition to higher zones coincides with gradual increase of H3K9me3/H3K79me3 and expansion of long-range genomic interactions across OR genes with ascending zonal identities. Within a zone, however, heterochromatin levels, and genomic interaction frequencies progressively decline along increasing zonal OR identities. Consequently, in each differentiating neuron only ORs with the correct zonal identity combine chromatin state and genomic compartmentalization properties compatible with future gene choice; ORs with lower zonal identities have high H3K79me3/H3K9me3 enrichment and are silenced, while ORs with higher zonal identities are excluded from activating genomic interactions and, thus, cannot be chosen. This process is regulated by the gradient expression of NFIA, B, and X, triple deletion of which causes homeotic transformations on zonal OR expression, heterochromatin formation and genomic compartmentalization.