Metazoan chromosomes are sequentially partitioned into topologically associating domains (TADs) and then into smaller sub-domains. One class of sub-domains, insulated neighborhoods, are proposed to spatially sequester and insulate the enclosed genes through self-association and chromatin looping. However, it has not been determined functionally whether promoter-enhancer interactions and gene regulation are broadly restricted to within these loops. Here, we employed published datasets from murine embryonic stem cells (mESCs) to identify insulated neighborhoods that confine promoter-enhancer interactions and demarcate gene regulatory regions. To directly address the functionality of these regions, we depleted estrogen-related receptor β (Esrrb), which binds the Mediator co-activator complex, to impair enhancers of genes within 222 insulated neighborhoods without causing mESC differentiation. Esrrb depletion reduces Mediator binding, promoter-enhancer looping, and expression of both nascent RNA and mRNA within the insulated neighborhoods without significantly affecting the flanking genes. Our data indicate that insulated neighborhoods represent functional regulons in mammalian genomes.