Co-option of endogenous retroviruses through genetic escape from TRIM28 repression

SUMMARY Endogenous retroviruses (ERVs) have rewired host gene networks through co-option of their enhancers. To explore which ERVs get co-opted and why, we tracked the epigenetic fate of murine IAPEz elements using an in vitro model of embryonic stem cell (ESC) to neural progenitor cell (NPC) differentiation. TRIM28-repression depended on a 190bp sequence, previously shown to confer IAPEzs with retrotransposition activity. A subset of IAPEzs (∼15%) exhibit genetic divergence from this sequence, which we term escapees. While repressed IAPEzs succumb to a previously undocumented epigenetic handover from H3K9me3 in ESCs to H3K27me3 in NPCs, escapee IAPEzs evade repression, resulting in their transcriptional derepression in NPCs. Escapee IAPEzs enhance expression of nearby neural genes and contribute to gene expression differences between mouse strains, which we discern by employing IAPEz insertion polymorphisms. In sum, co-opted ERVs stem from genetic escapees that have lost vital sequences required for both TRIM28 restriction and autonomous retrotransposition. HIGHLIGHTS Tracking the epigenetic fate of ERVs through neural differentiation reveals which ERVs are subject to co-option and why. Most ERVs succumb to H3K9me3 deposition in ESCs with H3K27me3 memory in NPCs. ERVs that act as enhancers to nearby neural genes have undergone genetic escape from TRIM28 repression. Epigenetic evasion is an evolutionary trade-off that comes with loss of sequences necessary for retrotransposition. Abstract Figure Graphical abstract.