Polycomb group (PcG) proteins form multimeric protein complexes which are involved in the heritable stable repression of genes. Previously, we identified two distinct human PcG protein complexes. The EED-EZH protein complex contains the EED and EZH2 PcG proteins, and the HPC-HPH PcG complex contains the HPC, HPH, BMI1, and RING1 PcG proteins. Here we show that YY1, a homolog of the Drosophila PcG protein pleiohomeotic (Pho), interacts specificially with the human PcG protein EED but not with proteins of the HPC-HPH PcG complex. Since YY1 and Pho are DNA-binding proteins, the interaction between YY1 and EED provides a direct link between the chromatin-associated EED-EZH PcG complex and the DNA of target genes. To study the functional significance of the interaction, we expressed the Xenopus homologs of EED and YY1 in Xenopus embryos. Both Xeed and XYY1 induce an ectopic neural axis but do not induce mesodermal tissues. In contrast, members of the HPC-HPH PcG complex do not induce neural tissue. The exclusive, direct neuralizing activity of both the Xeed and XYY1 proteins underlines the significance of the interaction between the two proteins. Our data also indicate a role for chromatin-associated proteins, such as PcG proteins, in Xenopus neural induction.During embryogenesis, the fertilized egg develops into a complex organism with many differentiated cell types. Maintenance of the differentiation status of these cells requires a cellular memory system that is responsible for the stable inheritance of gene expression (10). The Polycomb group (PcG) and trithorax group (trxG) genes are part of such a memory system, and in Drosophila they have been identified as repressors (PcG) and activators (trxG), respectively (20,33). Mutations in the PcG and trxG genes result in pleiotropic defects, of which homeotic transformations are the most apparent. The phenotypic defects in most of the PcG or trxG mutants become apparent only relatively late during Drosophila development, implying that these proteins indeed have a role in maintenance of cell differentiation. In vertebrates, similar roles for the PcG and trxG proteins in the maintenance of homeotic gene expression patterns, and consequently changes in the body plan, have been observed in PcG mutants (4, 29). However, mutations in some vertebrate PcG genes result in very early defects in development. This is exemplified by mutations in the eed (embryonic ectoderm development) gene, the vertebrate homolog of the Drosophila PcG gene extra sex combs (esc). The eed Ϫ/Ϫ mouse shows very early defects in development, resulting in gastrulation defects and lack of a node and of neural tissue (28). This indicates the involvement of PcG proteins in processes that precede maintenance of differentiation choices; it points towards involvement in embryonic inductions of tissues.PcG proteins have been found to interact with each other to form multimeric, chromatin-associated protein complexes. Both in Drosophila and in vertebrates, various components of PcG complexes have been identifi...