The cohesin complex is a key player in regulating cell division. Cohesin proteins SMC1, SMC3, Rad21, and stromalin (SA), along with associated proteins Nipped-B, Pds5, and EcoI, maintain sister chromatid cohesion before segregation to daughter cells during anaphase. Recent chromatin immunoprecipitation (ChIP) data reveal extensive overlap of Nipped-B and cohesin components with RNA polymerase II binding at active genes in Drosophila. These and other data strongly suggest a role for cohesion in transcription; however, there is no clear evidence for any specific mechanisms by which cohesin and associated proteins regulate transcription. We report here a link between cohesin components and trithorax group (trxG) function, thus implicating these proteins in transcription activation and/or elongation. We show that the Drosophila Rad21 protein is encoded by verthandi (vtd), a member of the trxG gene family that is also involved in regulating the hedgehog (hh) gene. In addition, mutations in the associated protein Nipped-B show similar trxG activity i.e., like vtd, they act as dominant suppressors of Pc and hh Mrt without impairing cell division. Our results provide a framework to further investigate how cohesin and associated components might regulate transcription.Hedgehog ͉ heterochromatin ͉ Nipped-B ͉ Polycomb ͉ cohesion I n eukaryotic mitosis, accurate chromosome segregation requires paired sister chromatids to attach to opposite spindle poles. Sister chromatids are held together by the cohesin protein complex, which consists of four core subunits, Rad21/SCC1, stromalin (SA) and structural maintenance of chromosome (SMC) proteins SMC1 and SMC3. A widely accepted model postulates that cohesin forms a ring-like structure via interaction of the N-and C-termini of Rad21 with a SMC1/SMC3 heterodimer. With the participation of SCC2/Nipped-B, SCC4, EcoI/Ctf7, and Pds5 proteins, sister-chromatid cohesion is maintained until the onset of mitosis. Cleavage of Rad21 and the resulting removal of cohesin then allow separation of sister chromatids in anaphase (see refs. 1-3 for reviews). Mutation of genes encoding these subunits leads to errors in chromosome segregation and aneuploidy, which are hallmarks of cancer and a leading cause of birth defects in humans (4).Given the highly conserved role for cohesin in sister chromatid cohesion, it was unexpected to discover that cohesin and associated proteins might also play a distinct, independent role in regulating gene expression. Reduction in Nipped-B expression in Drosophila affects expression of the cut and Ultrabithorax genes (5-7), and mutations in the human orthologue, NIPBL, result in Cornelia de Lange Syndrome (8). In zebrafish, mutations in rad21 or Smc3 affect embryonic runx gene transcription in heterozygous mutant animals without compromising cell division, suggesting that these proteins may have functions in transcription that are distinct from a mitotic role (9). Recently, Misulovin et al. observed extensive overlap of Nipped-B and cohesin components with RNA polymer...