Abstract
Compacted heterochromatin blocks are prevalent in differentiated cells and present a barrier to cellular reprogramming. It remains obscure how heterochromatin remodeling is orchestrated during cell differentiation. Here we find that the evolutionarily conserved homeodomain transcription factor Prospero (Pros)/Prox1 ensures neuronal differentiation by driving heterochromatin domain condensation and expansion. Intriguingly, in mitotically dividing Drosophila neural precursors, Pros is retained at H3K9me3+ pericentromeric heterochromatin regions of chromosomes via liquid-liquid phase separation (LLPS). During mitotic exit of neural precursors, mitotically retained Pros recruits and concentrates heterochromatin protein 1 (HP1) into phase-separated condensates and drives heterochromatin compaction. This establishes a transcriptionally repressive chromatin environment that guarantees cell-cycle exit and terminal neuronal differentiation. Importantly, mammalian Prox1 employs a similar "mitotic-implantation-ensured heterochromatin condensation" strategy to reinforce neuronal differentiation. Together, our results unveiled a new paradigm whereby mitotic implantation of a transcription factor via LLPS remodels H3K9me3+ heterochromatin and drives timely and irreversible terminal differentiation.