Resent studies have identified Pygopus as a core component of the -catenin/T-cell factor (TCF)/ lymphoid-enhancing factor 1 (LEF) transcriptional activation complex required for the expression of canonical Wg/Wnt target genes in Drosophila. However, the biochemical involvement of mammalian Pygopus proteins in -catenin/TCF/LEF gene activation remains controversial. In this study, we perform a series of molecular/biochemical experiments to demonstrate that Pygo2 associates with histone-modifying enzymatic complexes, specifically the MLL2 histone methyltransferase (HMT) and STAGA histone acetyltransferase (HAT) complexes, to facilitate their interaction with -catenin and to augment Wnt1-induced, TCF/LEF-dependent transcriptional activation in breast cancer cells. We identify a critical domain in Pygo2 encompassing the first 47 amino acids that mediates its HMT/HAT interaction. We further demonstrate the importance of this domain in Pygo2's ability to transcriptionally activate both artificial and endogenous Wnt target genes and to expand breast cancer stem-like cells in culture. This work now links mechanistically Pygo2's role in histone modification to its enhancement of the Wntdependent transcriptional program and cancer stem-like cell expansion.Epigenetic regulation underlies tissue development, homeostasis, and tumorigenesis and includes the modification of the chromatin in transcriptional activation or repression. The basic repeating unit of the chromatin is the nucleosome consisting of 146 bp of DNA wrapped around a histone octamer containing two copies of each of the histones H2A, H2B, H3, and H4. Methylation and acetylation of lysine (K) residues on histone H3 and H4 tails confer either activating or silencing effects on transcription. Dimethylation (me2) and trimethylation (me3) of H3K4 and acetylation (Ac) of H3K9/K14 are associated with transcriptional activation while H3K9 and H3K27 methylation is associated with transcriptional repression (49). Histone methylation is catalyzed by histone methyltransferases (HMTs) and reversed by histone demethylases, whereas the steady-state acetylation levels of histone proteins are achieved by the actions of histone acetyltransferases (HATs) and histone deacetylases (HDACs) (11, 42).In Saccharomyces cerevisiae, a multisubunit complex containing the Drosophila trithorax-related protein Set1 has been shown to be responsible for mono-, di-, and trimethylation of histone H3K4 (7). In humans, multiple Set1-like HMT complexes with H3K4 HMT activities have been identified (12). Each of these complexes contains the SET domain-containing homologs of yeast Set1, including human Set1 (hSet1), MLL1 (mixed-lineage leukemia 1, also known as MLL, HRX, ALL1, or KMT2A), MLL2 (mixed-lineage leukemia 2, also known as HRX2 or KMT2B), MLL3 (mixed-lineage leukemia 3, also known as HALR or KMT2C), and MLL4 (mixed-lineage leukemia 4, also known as ALR or KMT2D) (2,16,22,30,37,46), which carry the enzymatic activity for the associated complexes. RbBP5, WDR5, and Ash2L, which are homologs ...