The transcriptional corepressor Groucho (Gro) is required for the function of many developmentally regulated DNA binding repressors, thus helping to define the gene expression profile of each cell during development. The ability of Gro to repress transcription at a distance together with its ability to oligomerize and bind to histones has led to the suggestion that Gro may spread along chromatin. However, much is unknown about the mechanism of Gro-mediated repression and about the dynamics of Gro targeting. Our chromatin immunoprecipitation sequencing analysis of temporally staged Drosophila embryos shows that Gro binds in a highly dynamic manner primarily to clusters of discrete (<1 kb) segments. Consistent with the idea that Gro may facilitate communication between silencers and promoters, Gro binding is enriched at both cis-regulatory modules, as well as within the promotors of potential target genes. While this Gro-recruitment is required for repression, our data show that it is not sufficient for repression. Integration of Gro binding data with transcriptomic analysis suggests that, contrary to what has been observed for another Gro family member, Drosophila Gro is probably a dedicated repressor. This analysis also allows us to define a set of high confidence Gro repression targets. Using publically available data regarding the physical and genetic interactions between these targets, we are able to place them in the regulatory network controlling development. Through analysis of chromatin associated pre-mRNA levels at these targets, we find that genes regulated by Gro in the embryo are enriched for characteristics of promoter proximal paused RNA polymerase II. Our findings are inconsistent with a one-dimensional spreading model for long-range repression and suggest that Gro-mediated repression must be regulated at a post-recruitment step. They also show that Gro is likely a dedicated repressor that sits at a prominent highly interconnected regulatory hub in the developmental network. Furthermore, our findings suggest a role for RNA polymerase II pausing in Gro-mediated repression.