Abstract
Nuclear Argonaute proteins, guided by small RNAs, mediate sequence-specific heterochromatin formation. The molecular principles that link Argonaute-small RNA complexes to cellular heterochromatin effectors on binding to nascent target RNAs are poorly understood. Here, we explain the mechanism by which the PIWI-interacting RNA (piRNA) pathway connects to the heterochromatin machinery in Drosophila. We find that Panoramix, a corepressor required for piRNA-guided heterochromatin formation, is SUMOylated on chromatin in a Piwi-dependent manner. SUMOylation, together with an amphipathic LxxLL motif in Panoramix's intrinsically disordered repressor domain, are necessary and sufficient to recruit Small ovary (Sov), a multi-zinc-finger protein essential for general heterochromatin formation and viability. Structure-guided mutations that eliminate the Panoramix-Sov interaction or that prevent SUMOylation of Panoramix uncouple Sov from the piRNA pathway, resulting in viable but sterile flies in which Piwi-targeted transposons are derepressed. Thus, Piwi engages the heterochromatin machinery specifically at transposon loci by coupling recruitment of a corepressor to nascent transcripts with its SUMOylation.