Polycomb group (PcG) proteins form multiprotein complexes, called Polycomb repressive complexes (PRCs). PRC2 contains the PcG proteins EZH2, SUZ12, and EED and represses transcription through methylation of lysine (K) 27 of histone H3 (H3). Suz12 is essential for PRC2 activity and its inactivation results in early lethality of mouse embryos. Here, we demonstrate that Suz12(-/-) mouse embryonic stem (ES) cells can be established and expanded in tissue culture. The Suz12(-/-) ES cells are characterized by global loss of H3K27 trimethylation (H3K27me3) and higher expression levels of differentiation-specific genes. Moreover, Suz12(-/-) ES cells are impaired in proper differentiation, resulting in a lack of repression of ES cell markers as well as activation of differentiation-specific genes. Finally, we demonstrate that the PcGs are actively recruited to several genes during ES cell differentiation, which despite an increase in H3K27me3 levels is not always sufficient to prevent transcriptional activation. In summary, we demonstrate that Suz12 is required for the establishment of specific expression programs required for ES cell differentiation. Furthermore, we provide evidence that PcGs have different mechanisms to regulate transcription during cellular differentiation.