Segment identity in both invertebrates and vertebrates is conferred by spatially restricted distribution of homeotic gene products. In Drosophila, the expression of Homeobox genes during embryogenesis is initially induced by segmentation gene products and then maintained by Polycomb group and Trithorax group gene products. Polycomb group gene homologs are conserved in vertebrates. Murine mel-18 and closely related bmi-1 are homologous to posterior sex combs and suppressor two of zeste. Mel-18 protein mediates a transcriptional repression via direct binding to specific DNA sequences. To gain further insight into the function of Mel-18, we have inactivated the mel-18 locus by homologous recombination. Mice lacking mel-18 survive to birth and die around 4 weeks after birth after exhibiting strong growth retardation. Similar to the Drosophila posterior sex combs mutant, posterior transformations of the axial skeleton were reproducibly observed in mel-18 mutants. The homeotic transformations were correlated with ectopic expression of Homeobox cluster genes along the anteroposterior axis in the developing paraxial mesoderm. Surprisingly, mel-18deficient phenotypes are reminiscent of bmi-1 mutants. These results indicate that the vertebrate Polycomb group genes mel-18 and bmi-1, like Drosophila Polycomb group gene products, might play a crucial role in maintaining the silent state of Homeobox gene expression during paraxial mesoderm development.