Polycomb-group (PcG) and Trithorax-group proteins together form a maintenance machinery that is responsible for stable heritable states of gene activity. While the best-studied target genes are the Hox genes of the Antennapedia and Bithorax complexes, a large number of key developmental genes are also Polycomb (Pc) targets, indicating a widespread role for this maintenance machinery in cell fate determination. We have studied the linkage between the binding of PcG proteins and the developmental regulation of gene expression using whole-genome mapping to identify sites bound by the PcG proteins, Pc and Pleiohomeotic (Pho), in the Drosophila embryo and in a more restricted tissue, the imaginal discs of the third thoracic segment. Our data provide support for the idea that Pho is a general component of the maintenance machinery, since the majority of Pc targets are also associated with Pho binding. We find, in general, considerable developmental stability of Pc and Pho binding at target genes and observe that Pc/Pho binding can be associated with both expressed and inactive genes. In particular, at the Hox complexes, both active and inactive genes have significant Pc and Pho binding. However, in comparison to inactive genes, the active Hox genes show reduced and altered binding profiles. During development, Pc target genes are not simply constantly associated with Pc/Pho binding, and we identify sets of genes with clear differential binding between embryo and imaginal disc. Using existing datasets, we show that for specific fate-determining genes of the haemocyte lineage, the active state is characterised by lack of Pc binding. Overall, our analysis suggests a dynamic relationship between Pc/Pho binding and gene transcription. Pc/Pho binding does not preclude transcription, but levels of Pc/Pho binding change during development, and loss of Pc/Pho binding can be associated with both stable gene activity and inactivity. Cells make fate decisions as they progressively differentiate into specific cell types during development. The stability of these decisions is important and is achieved, in part, by changes to the chromatin that packages DNA in the nucleus. A key set of protein complexes that together constitute the Polycomb-group/Trithorax-group (PcG/TrxG) machinery is involved in chromatin modification and is known to operate at a large number of genes involved in developmental decisions. The PcG proteins establish stable gene repression, whereas the TrxG counteract the PcG to enable gene activation. How this PcG/TrxG balance works is not understood. By mapping PcG protein binding to chromatin in vivo, we show, in general, a relatively constant association of PcG protein at target genes during development. However, we also find changes in binding at specific genes. While some of these changes are consistent with a loss of PcG proteins associated with gene expression, we also find examples where PcG proteins are present at active genes and not present at inactive genes. Our analysis supports the idea that simply the presence of PcG proteins at a target gene does not necessarily result in gene repression and suggests a more dynamic balance between PcG protein binding and gene expression.