Coordinated regulation of gene activity by transcriptional and translational mechanisms poise stem cells for a timely cell-state transition during differentiation. Although important for all stemness-to-differentiation transitions, mechanistic understanding of the fine-tuning of gene transcription is lacking due to the compensatory effect of translational control. We used intermediate neural progenitor (INP) identity commitment to define the mechanisms that fine-tune stemness gene transcription in fly neural stem cells (neuroblasts). We demonstrate that the transcription factor Fruitless[C] (Fru[C]) binds cis-regulatory elements of most genes uniquely transcribed in neuroblasts. Loss of fru[C] function alone has no effect on INP commitment but drives INP dedifferentiation when translational control is reduced. Fru[C] negatively regulates gene expression by promoting low-level enrichment of the repressive histone mark H3K27me3 in gene cis-regulatory regions. Identical to fru[C] loss-of-function, reducing Polycomb Repressive Complex 2 activity increases stemness gene activity. We propose low-level H3K27me3 enrichment fine-tunes gene transcription in stem cells, a mechanism likely conserved from flies to humans.
