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Human embryonic stem cell (hESC) differentiation promises advances in regenerative medicine(1-3), yet conversion of hESCs into tissues such as keratinocytes requires a better understanding of epigenetic interactions between the inductive morphogens retinoic acid (RA) and bone morphogenetic protein 4 (BMP), and the master regulator p63(4,5). Here we develop a robust, defined, keratinocyte differentiation system, and use a multi-dimensional genomics approach to interrogate the contributions of the morphogens and lineage selector to chromatin dynamics during early surface ectoderm commitment. In stark contrast to other master regulators(6-9), we find using p63 gain and loss of function hESC lines, that p63 effects major transcriptional changes only after morphogenetic action. Morphogens alter chromatin accessibility and histone modifications, establishing an epigenetic landscape for p63 to modify. In turn, p63 closes chromatin accessibility and promotes the accumulation of repressive H3K27me3 histone modifications at sites distal to where it binds. Surprisingly, cohesin HiChIP(10) visualization of genome-wide chromosome conformation reveals that both p63 and the morphogens contribute to dynamic long-range genomic interactions that increase the probability of negative transcriptional regulation at p63 target loci. p63-regulated accessibility, not H3K27me3 deposition, appears to drive early transcriptional changes. We illustrate morphogen-selector interactions by studying p63 negative feedback regulation of TFAP2C(11), whereby disruption of the single p63 binding site results in a loss of p63-mediated transcriptional control and dramatic increases in TFAP2C and p63 expression. Our study reveals the unexpected dependency of p63 on morphogenetic signaling to control long-range chromatin interactions during tissue specification and provides novel insights into how master regulators specify diverse morphological outcomes.

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