The Polycomb group (PcG) encodes an evolutionarily conserved set of chromatin-modifying proteins that are thought to maintain cellular transcriptional memory by stably silencing gene expression1. In mouse embryos mutated for the PcG protein Eed, X-chromosome inactivation (XCI) is not stably maintained in extra-embryonic tissues2. Eed is a component of a histone-methyltransferase complex that is thought to contribute to stable silencing in undifferentiated cells due to its enrichment on the inactive X-chromosome (Xi) in cells of the early mouse embryo and in stem cells of the extra-embryonic trophectoderm lineage3–8. Here we demonstrate that the Xi in Eed−/− trophoblast stem (TS) cells and in cells of the trophectoderm-derived extra-embryonic ectoderm in Eed−/− embryos remains transcriptionally silent, despite lacking the PcG-mediated histone modifications that normally characterize the facultative heterochromatin of the Xi. While undifferentiated Eed−/− TS cells maintained XCI, reactivation of the Xi occurred when these cells were differentiated. These results indicate that PcG complexes are not necessary to maintain transcriptional silencing of the Xi in undifferentiated stem cells. Instead, PcG proteins appear to propagate cellular memory by preventing transcriptional activation of facultative heterochromatin during differentiation.