While the Polycomb complex is known to regulate cell identity in ES cells, its role in controlling tissue‐specific stem cells is not well understood. Here we show that removal of Ezh1 and Ezh2, key Polycomb subunits, from mouse skin results in a marked change in fate determination in epidermal progenitor cells, leading to an increase in the number of lineage‐committed Merkel cells, a specialized subtype of skin cells involved in mechanotransduction. By dissecting the genetic mechanism, we showed that the Polycomb complex restricts differentiation of epidermal progenitor cells by repressing the transcription factor Sox2. Ablation of Sox2 results in a dramatic loss of Merkel cells, indicating that Sox2 is a critical regulator of Merkel cell specification. We show that Sox2 directly activates Atoh1 , the obligate regulator of Merkel cell differentiation. Concordantly, ablation of Sox2 attenuated the Ezh1/2 ‐null phenotype, confirming the importance of Polycomb‐mediated repression of Sox2 in maintaining the epidermal progenitor cell state. Together, these findings define a novel regulatory network by which the Polycomb complex maintains the progenitor cell state and governs differentiation in vivo . There is a [Have you seen?][1] (July 2013) associated with this Article. [1]: http://dx.doi.org/10.1038/emboj.2013.132

Merkel cell–neurite complexes are located in touch-sensitive areas of the mammalian skin and are involved in recognition of the texture and shape of objects. Merkel cells are essential for these tactile discriminations, as they generate action potentials in response to touch stimuli and induce the firing of innervating afferent nerves. It has been shown that Merkel cells originate from epidermal stem cells, but the cellular and molecular mechanisms of their development are largely unknown. In this study, we analyzed Merkel cell differentiation during development and found that it is a temporally regulated maturation process characterized by a sequential activation of Merkel cell-specific genes. We uncovered key transcription factors controlling this process and showed that the transcription factor Atoh1 is required for initial Merkel cell specification. The subsequent maturation steps of Merkel cell differentiation are controlled by cooperative function of the transcription factors Sox2 and Isl1, which physically interact and work to sustain Atoh1 expression. These findings reveal the presence of a robust transcriptional network required to produce functional Merkel cells that are required for tactile discrimination.