Biological control potential of insect‐pathogenic fungi against pests is an overall output of various cellular processes regulated by signalling and epigenetic networks. In Beauveria bassiana, mono/di/trimethylation of histone H3 Lys 4 (H3K4me1/me2/m3) was abolished by inactivation of the histone lysine methyltransferase SET1/KMT2, leading to marked virulence loss, reductions in conidial hydrophobicity and adherence to insect cuticle, impeded proliferation in vivo, severe defects in growth and conidiation, and increased sensitivities to cell wall perturbation, H2O2 and heat shock. Such compromised phenotypes correlated well with transcriptional abolishment or repression of carbon catabolite‐repressing transcription factor Cre1, classes I and II hydrophobins Hyd1 and Hyd2 required for cell hydrophobicity, key developmental regulators, and stress‐responsive enzymes/proteins. Particularly, expression of cre1, which upregulates hyd4 upon activation by KMT2‐mediated H3K4me3 in Metarhizium robertsii, was nearly abolished in the Δset1 mutant, leading to abolished expression of hyd1 and hyd2 as homologues of hyd4. These data suggest that the SET1‐Cre1‐Hyd1/2 pathway function in B. bassiana like the KMT2‐Cre1‐Hyd4 pathway elucidated to mediate pathogenicity in M. robertsii. Our findings unveil not only a regulatory role for the SET1‐cored pathway in fungal virulence but also its novel role in mediating asexual cycle in vitro and stress responses in B. bassiana.