Similar to mammalian neural progenitors, Drosophila neuroblasts progressively lose competence to make early-born neurons. In neuroblast 7-1 (NB7-1), Kruppel (Kr) specifies the third-born U3 motoneuron and Kr misexpression induces ectopic U3 cells. However, competence to generate U3 cells is limited to early divisions, when the Eve(+) U motoneurons are produced, and competence is lost when NB7-1 transitions to making interneurons. We have found that Polycomb repressor complexes (PRCs) are necessary and sufficient to restrict competence in NB7-1. PRC loss of function extends the ability of Kr to induce U3 fates and PRC gain of function causes precocious loss of competence to make motoneurons. PRCs also restrict competence to make HB9(+) Islet(+) motoneurons in another neuroblast that undergoes a motoneuron-to-interneuron transition, NB3-1. In contrast to the regulation of motoneuron competence, PRC activity does not affect the production of Eve(+) interneurons by NB3-3, HB9(+) Islet(+) interneurons by NB7-3, or Dbx(+) interneurons by multiple neuroblasts. These findings support a model in which PRCs establish motoneuron-specific competence windows in neuroblasts that transition from motoneuron to interneuron production.