The mechanism(s) behind folate rescue of neural tube closure are not well understood. In this study we show that maternal intake of folate prior to conception reverses the proliferation potential of neural crest stem cells in homozygous Splotch embryos (Sp(-/-)) via epigenetic mechanisms. It is also shown that the pattern of differentiation seen in these cells is similar to wild-type (WT). Cells from open caudal neural tubes of Sp(-/-) embryos exhibit increased H3K27 methylation and decreased expression of KDM6B possibly due to up-regulation of KDM6B targeting micro-RNAs such as miR-138, miR-148a, miR-185, and miR-339-5p. In our model, folate reversed these epigenetic marks in folate-rescued Sp(-/-) embryos. Using tissue from caudal neural tubes of murine embryos we also examined H3K27me2 and KDM6B association with Hes1 and Neurog2 promoters at embryonic day E10.5, the proliferative stage, and E12.5, when neural differentiation begins. In Sp(-/-) embryos compared with WT, levels of H3K27me2 associated with the Hes1 promoter were increased at E10.5, and levels associated with the Neurog2 promoter were increased at E12.5. KDM6B association with Hes1 and Neurog2 promoters was inversely related to H3K27me2 levels. These epigenetic changes were reversed in folate-rescued Sp(-/-) embryos. Thus, one of the mechanisms by which folate may rescue the Sp(-/-) phenotype is by increasing the expression of KDM6B, which in turn decreases H3K27 methylation marks on Hes1 and Neurog2 promoters thereby affecting gene transcription.