Polycomb-mediated repression and DNA methylation are important epigenetic mechanisms of gene silencing. Recent evidence suggests a functional link between the polycomb repressive complex (PRC) and Dnmts in cancer cells. Here we provide evidence that Lsh, a regulator of DNA methylation, is also involved in normal control of PRC-mediated silencing during embryogenesis. We demonstrate that Lsh, a SNF2 homolog, can associate with some Hox genes and regulates Dnmt3b binding, DNA methylation, and silencing of Hox genes during development. Moreover, Lsh can associate with PRC1 components and influence PRC-mediated histone modifications. Thus Lsh is part of a physiological feedback loop that reinforces DNA methylation and silencing of PRC targets.