Abstract
Genome organization is thought to underlie cell type specific gene expression, yet how it is regulated in progenitors to produce cellular diversity is unknown. In Drosophila, a developmentally-timed genome reorganization in neural progenitors terminates competence to produce early-born neurons. These events require downregulation of Distal antenna (Dan), part of the conserved pipsqueak DNA-binding superfamily. Here we find that Dan forms liquid-like condensates with high protein mobility, and whose size and subnuclear distribution are balanced with its DNA-binding. Further, we identify a LARKS domain, a structural motif associated with condensate-forming proteins. Deleting just 13 amino acids from LARKS abrogates Dan's ability to retain the early-born neural fate gene, hunchback, in the neuroblast nuclear interior and maintain competence in vivo. Conversely, domain-swapping with LARKS from known phase-separating proteins rescues Dan's effects on competence. Together, we provide in vivo evidence for condensate formation and the regulation of progenitor nuclear architecture underlying neuronal diversification.