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The PAF complex (PAFC) coordinates transcription elongation and mRNA processing events and its CDC73/parafibromin subunit functions as a tumour suppressor. The NF2/Merlin tumour suppressor functions at the cell cortex and nucleus and is a key mediator of contact inhibition. Here we provide a direct link between nuclear Merlin and transcription elongation controlled by cell-cell adhesion. Merlin interacts with the PAFC in a cell density-dependent manner and tumour-derived inactivating mutations in both Merlin and CDC73 mutually disrupt their interaction. Growth suppression by Merlin requires CDC73 and Merlin regulates PAFC association with chromatin in a subset of genes. We also identify by CDC73 affinity-proteomics a role for FAT cadherins in regulating the Merlin-PAFC interaction. Our results suggest that in addition to its function within the Hippo pathway, nuclear Merlin is part of a tumour suppressor network which coordinates post-initiation steps of the transcription cycle of genes mediating in contact inhibition.

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