Genetic alterations conferring resistance to the effects of chemical inhibitors are valuable tools for validating on-target effects in cells. Unfortunately, for many therapeutic targets such alleles are not available. To address this issue, we evaluated whether CRISPR-Cas9-mediated insertion/deletion (indel) mutagenesis can produce drug-resistance alleles at endogenous loci. This method takes advantage of the heterogeneous in-frame alleles produced following Cas9-mediated DNA cleavage, which we show can generate rare alleles that confer resistance to the growth-arrest caused by chemical inhibitors. We used this approach to identify novel resistance alleles of two lysine methyltransferases, DOT1L and EZH2, which are each essential for the growth of MLL-fusion leukemia cells. We biochemically characterized the DOT1L mutation, showing that it is significantly more active than the wild-type enzyme. These findings validate the on-target anti-leukemia activities of existing DOT1L and EZH2 inhibitors and reveal a simple method for deriving drug-resistance alleles for novel targets, which may have utility during early stages of drug development.