Clonal hematopoiesis (CH) is defined as a single hematopoietic stem/progenitor cell (HSPC) gaining selective advantage over a broader range of HSPCs. When linked to somatic mutations in myeloid malignancy-associated genes, such as TET2-mediated clonal hematopoiesis of indeterminate potential or CHIP, it represents increased risk for hematological malignancies and cardiovascular disease. IL1β is elevated in patients with CHIP, however, its effect is not well understood. Here we show that IL1β promotes expansion of pro-inflammatory monocytes/macrophages, coinciding with a failure in the demethylation of lymphoid and erythroid lineage associated enhancers and transcription factor binding sites, in a mouse model of CHIP with hematopoietic-cell-specific deletion of Tet2. DNA-methylation is significantly lost in wild type HSPCs upon IL1β administration, which is resisted by Tet2-deficient HSPCs, and thus IL1β enhances the self-renewing ability of Tet2-deficient HSPCs by upregulating genes associated with self-renewal and by resisting demethylation of transcription factor binding sites related to terminal differentiation. Using aged mouse models and human progenitors, we demonstrate that targeting IL1 signaling could represent an early intervention strategy in preleukemic disorders. In summary, our results show that Tet2 is an important mediator of an IL1β-promoted epigenetic program to maintain the fine balance between self-renewal and lineage differentiation during hematopoiesis.