Competition for H2A.Z underlies the developmental impacts of repetitive element de-repression

The histone variant H2A.Z is central to early embryonic development, determining transcriptional competency through chromatin regulation of gene promoters and enhancers. In addition to genic loci, we find that H2A.Z resides at a subset of evolutionarily young repetitive elements, including DNA transposons, long interspersed nuclear elements and long terminal repeats, during early zebrafish development. Moreover, increases in H2A.Z occur when repetitive elements become transcriptionally active. Acquisition of H2A.Z corresponds with a reduction in the levels of the repressive histone modification H3K9me3 and a moderate increase in chromatin accessibility. Notably, however, de-repression of repetitive elements also leads to a significant reduction in H2A.Z over non-repetitive genic loci. Genic loss of H2A.Z is accompanied by transcriptional silencing at adjacent coding sequences, but remarkably, these impacts are mitigated by augmentation of total H2A.Z protein via transgenic overexpression. Our study reveals that levels of H2A.Z protein determine embryonic sensitivity to de-repression of repetitive elements, that repetitive elements can function as a nuclear sink for epigenetic factors and that competition for H2A.Z greatly influences overall transcriptional output during development. These findings uncover general mechanisms in which counteractive biological processes underlie phenotypic outcomes.