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Chromatin is the physical template that stabilizes and specifies transcriptional programs. To date, it remains largely unclear to what extent chromatin machinery contributes to the susceptibility and progression of complex diseases. Here, we combined deep epigenome mapping with single cell transcriptomics to mine for evidence of chromatin dysregulation in type-2 diabetes. We identify two chromatin-state signatures that track the trajectory of β-cell dysfunction in mice and humans: ectopic activation of bivalent Polycomb-domains and a loss of expression at a subclass of highly active domains containing key lineage-defining genes. β-cell specific deletion of Polycomb (Eed/PRC2) triggers parallel transcriptional signatures. Intriguingly, these β-cell Eed-knockouts also exhibit highly penetrant hyperglycemia-independent dedifferentiation indicating that Polycomb dysregulation sensitizes the β-cell for dedifferentiation. These findings provide novel resources for exploring transcriptional and epigenetic control of β-cell (dys)function. They identify PRC2 as necessary for longterm maintenance of β-cell identity. The data suggest a two-hit model for loss of β-cell identity in diabetes and highlight epigenetic therapeutic potential to block dedifferentiation.

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