During the emergence and radiation of complex multicellular eukaryotes from unicellular ancestors, transcriptional systems evolved by becoming more complex to provide the basis for this morphological diversity. The way eukaryotic genomes are packaged into a highly complex structure, known as chromatin, underpins this evolution of transcriptional regulation. Chromatin structure is controlled by a variety of different epigenetic mechanisms, including the major mechanism for altering the biochemical makeup of the nucleosome by replacing core histones with their variant forms. The histone H2A variant H2A.Z is particularly important in early metazoan development because, without it, embryos cease to develop and die. However, H2A.Z is also required for many differentiation steps beyond the stage that H2A.Z-knockout embryos die. H2A.Z can facilitate the activation and repression of genes that are important for pluripotency and differentiation, and acts through a variety of different molecular mechanisms that depend upon its modification status, its interaction with histone and nonhistone partners, and where it is deposited within the genome. In this review, we discuss the current knowledge about the different mechanisms by which H2A.Z regulates chromatin function at various developmental stages and the chromatin remodeling complexes that determine when and where H2A.Z is deposited.