UTX (KDM6A) and UTY are homologous X and Y chromosome members of the Histone H3 Lysine 27 (H3K27) demethylase gene family. UTX can demethylate H3K27; however, in vitro assays suggest that human UTY has lost enzymatic activity due to sequence divergence. We produced mouse mutations in both Utx and Uty. Homozygous Utx mutant female embryos are mid-gestational lethal with defects in neural tube, yolk sac, and cardiac development. We demonstrate that mouse UTY is devoid of in vivo demethylase activity, so hemizygous X(Utx-) Y(+) mutant male embryos should phenocopy homozygous X(Utx-) X(Utx-) females. However, X(Utx-) Y(+) mutant male embryos develop to term; although runted, approximately 25% survive postnatally reaching adulthood. Hemizygous X(+) Y(Uty-) mutant males are viable. In contrast, compound hemizygous X(Utx-) Y(Uty-) males phenocopy homozygous X(Utx-) X(Utx-) females. Therefore, despite divergence of UTX and UTY in catalyzing H3K27 demethylation, they maintain functional redundancy during embryonic development. Our data suggest that UTX and UTY are able to regulate gene activity through demethylase independent mechanisms. We conclude that UTX H3K27 demethylation is non-essential for embryonic viability.