Facioscapulohumeral dystrophy (FSHD) is linked to contraction of D4Z4 repeats on chromosome 4q with SMCHD1 mutations acting as a disease modifier. D4Z4 heterochromatin disruption and abnormal upregulation of the transcription factor DUX4, encoded in the D4Z4 repeat, are the hallmarks of FSHD. However, defining the precise effect of D4Z4 contraction has been difficult because D4Z4 repeats are primate-specific and DUX4 expression is very rare in highly heterogeneous patient myocytes. We generated isogenic mutant cell lines harboring D4Z4 and/or SMCHD1 mutations in a healthy human skeletal myoblast line. We found that the mutations affect D4Z4 heterochromatin differently, and that SMCHD1 mutation or disruption of DNA methylation stabilizes otherwise variegated DUX4 target activation in D4Z4 contraction mutant cells, demonstrating the critical role of modifiers. Our study revealed amplification of the DUX4 signal through downstream targets, H3.X/Y and LEUTX. Our results provide important insights into how rare DUX4 expression leads to FSHD pathogenesis.