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The acquisition and maintenance of cell fate are essential for metazoan growth and development. A strict coordination between genetic and epigenetic programs regulates cell fate determination and maintenance. Polycomb group (PcG) genes are identified as essential in these epigenetic developmental processes. These genes encode components of multimeric transcriptional repressor complexes that are crucial in maintaining cell fate. PcG proteins have also been shown to play a central role in stem cell maintenance and lineage specification. PcG proteins, together with a battery of components including sequence-specific DNA binding/accessory factors, chromatin remodeling factors, signaling pathway intermediates, noncoding small RNAs, and RNA interference machinery, generally define a dynamic cellular identity through tight regulation of specific gene expression patterns. Epigenetic modification of chromatin structure that results in expression silencing of specific genes is now emerging as an important molecular mechanism in this process. In embryonic stem (ES) cells and adult stem cells, such specific genes represent those associated with differentiation and development, and silencing of these genes in a PcG protein-dependent manner confers stemness. ES cells also contain novel chromatin motifs enriched in epigenetic modifications associated with both activation and repression of genes, suggesting that certain genes are poised for activation or repression. Interestingly, these chromatin domains are highly coincident with the promoters of developmental regulators, which are also found to be occupied by PcG proteins. The epigenetic integrity is compromised, however, by mutations or other alterations that affect the function of PcG proteins in stem cells leading to aberrant cell proliferation and tissue transformation, a hallmark of cancer. Disclosure of potential conflicts of interest is found at the end of this article.