Posterior fossa type A (PFA) ependymomas exhibit very low H3K27 methylation and express high levels of EZHIP (Enhancer of Zeste Homologs Inhibitory Protein, also termed CXORF67). Here we find that a conserved sequence in EZHIP is necessary and sufficient to inhibit PRC2 catalytic activity in vitro and in vivo. EZHIP directly contacts the active site of the EZH2 subunit in a mechanism similar to the H3 K27M oncohistone. Furthermore, expression of H3 K27M or EZHIP in cells promotes similar chromatin profiles: loss of broad H3K27me3 domains, but retention of H3K27me3 at CpG islands. We find that H3K27me3-mediated allosteric activation of PRC2 substantially increases the inhibition potential of EZHIP and H3 K27M, providing a mechanism to explain the observed loss of H3K27me3 spreading in tumors. Our data indicate that PFA ependymoma and DIPG are driven in part by the action of peptidyl PRC2 inhibitors, the K27M oncohistone and the EZHIP 'oncohistone-mimic', that dysregulate gene silencing to promote tumorigenesis.