Histone proteolysis is a poorly understood phenomenon in which the N-terminal tails of histones are irreversibly cleaved by intracellular proteases. During development, histone post-translational modifications are known to orchestrate gene expression patterns that ultimately drive cell fate decisions. Therefore, deciphering the mechanisms of histone proteolysis is necessary to enhance the understanding of cellular differentiation. Here we show that H2A is cleaved by the lysosomal protease Cathepsin L during ESCs differentiation. Using quantitative mass spectrometry (MS), we identified L23 to be the primary cleavage site that gives rise to the clipped form of H2A (cH2A), which reaches a maximum level of ~ 1% of total H2A after four days of differentiation. Using ChIP-seq, we found that preventing proteolysis leads to an increase in acetylated H2A at promoter regions in differentiated ES cells. We also identified novel readers of different acetylated forms of H2A in pluripotent ES cells, such as members of the PBAF remodeling complex. Finally, we showed that H2A proteolysis abolishes this recognition. Altogether, our data suggests that proteolysis serves as an efficient mechanism to silence pluripotency genes and destabilize the nucleosome core particle.