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Phenotypically identical mammalian cells often display considerable variability in transcript levels of individual genes. How transcriptional activity propagates in cell lineages, and how this varies across genes is poorly understood. Here we combine live-cell imaging of short-lived transcriptional reporters in mouse embryonic stem cells with mathematical modelling to quantify the propagation of transcriptional activity over time and across cell generations in phenotypically homogenous cells. In sister cells we find mean transcriptional activity to be strongly correlated and transcriptional dynamics tend to be synchronous; both features control how quickly transcriptional levels in sister cells diverge in a gene-specific manner. Moreover, mean transcriptional activity is transmitted from mother to daughter cells, leading to multi-generational transcriptional memory and causing inter-family heterogeneity in gene expression.