SUMMARYPlant stems constitute the most abundant renewable resource on earth. The function of lysine (K)‐2‐hydroxyisobutyrylation (Khib), a novel post‐translational modification (PTM), has not yet been elucidated in plant stem development. Here, by assessing typical pepper genotypes with straight stem (SS) and prostrate stem (PS), we report the first large‐scale proteomics analysis for protein Khib to date. Khib‐modifications influenced central metabolic processes involved in stem development, such as glycolysis/gluconeogenesis and protein translation. The high Khib level regulated gene expression and protein accumulation associated with cell wall formation in the pepper stem. Specially, we found that CaMYB61 knockdown lines that exhibited prostrate stem phenotypes had high Khib levels. Most histone deacetylases (HDACs, e.g., switch‐independent 3 associated polypeptide function related 1, AFR1) potentially function as the “erasing enzymes” involved in reversing Khib level. CaMYB61 positively regulated CaAFR1 expression to erase Khib and promote cellulose and hemicellulose accumulation in the stem. Therefore, we propose a bidirectional regulation hypothesis of “Khib modifications” and “Khib erasing” in stem development, and reveal a novel epigenetic regulatory network in which the CaMYB61‐CaAFR1 molecular module participating in the regulation of Khib levels and biosynthesis of cellulose and hemicellulose for the first time.