Polycomb group (PcG) proteins are conserved regulatory proteins that repress transcription of particular target genes in animals and plants. Studies over the past decade have established that most PcG proteins are not classic DNA binding factors but that they exist in multisubunit protein complexes that bind to and modify chromatin. Nevertheless, PcG repression of target genes in Drosophila requires specific cis-regulatory sequences, called Polycomb response elements (PREs), and chromatin immunoprecipitation studies have shown that, in vivo, most PcG proteins are specifically bound at the PREs of target genes. However, the mechanisms by which these PcG protein complexes are recruited to PREs and how they repress transcription are still poorly understood. Recent studies challenge earlier models that invoke covalent histone modifications and chromatin binding as the key steps in the recruitment of PcG proteins to PREs. The available evidence suggests that PREs are largely devoid of nucleosomes and that PRE DNA serves as an assembly platform for many different PcG protein complexes through DNA-protein and protein-protein interactions. The emerging picture suggests that the binding and modification of chromatin by PcG proteins is needed for interaction of PRE-tethered PcG protein complexes with nucleosomes in the flanking chromatin in order to maintain a Polycomb-repressed chromatin state at promoters and coding regions of target genes.