The Drosophila kismet gene was identified in a screen for dominant suppressors of Polycomb, a repressor of homeotic genes. Here we show that kismet mutations suppress the Polycomb mutant phenotype by blocking the ectopic transcription of homeotic genes. Loss of zygotic kismet function causes homeotic transformations similar to those associated with loss-of-function mutations in the homeotic genes Sex combs reduced and Abdominal-B. kismet is also required for proper larval body segmentation. Loss of maternal kismet function causes segmentation defects similar to those caused by mutations in the pair-rule gene even-skipped. The kismet gene encodes several large nuclear proteins that are ubiquitously expressed along the anterior-posterior axis. The Kismet proteins contain a domain conserved in the trithorax group protein Brahma and related chromatin-remodeling factors, providing further evidence that alterations in chromatin structure are required to maintain the spatially restricted patterns of homeotic gene transcription.