The cohesin complex is a key player in regulating cell division. Cohesin proteins SMC1, SMC3, Rad21, and stromalin (SA), along with associated proteins Nipped-B, Pds5, and EcoI, maintain sister chromatid cohesion before segregation to daughter cells during anaphase. Recent chromatin immunoprecipitation (ChIP) data reveal extensive overlap of Nipped-B and cohesin components with RNA polymerase II binding at active genes in Drosophila . These and other data strongly suggest a role for cohesion in transcription; however, there is no clear evidence for any specific mechanisms by which cohesin and associated proteins regulate transcription. We report here a link between cohesin components and trithorax group ( trxG ) function, thus implicating these proteins in transcription activation and/or elongation. We show that the Drosophila Rad21 protein is encoded by verthandi (vtd ), a member of the trxG gene family that is also involved in regulating the hedgehog ( hh ) gene. In addition, mutations in the associated protein Nipped-B show similar trxG activity i.e., like vtd , they act as dominant suppressors of Pc and hh Mrt without impairing cell division. Our results provide a framework to further investigate how cohesin and associated components might regulate transcription.