Polycomb Repressive Complex 2 (PRC2) plays crucial roles in transcriptional regulation and stem cell development. However, the context-specific functions associated with alternative subunits remain largely unexplored. Here we show that the related enzymatic subunits EZH1 and EZH2 undergo an expression switch during hematopoiesis. We examine the in vivo stoichiometry of the PRC2 complexes by quantitative proteomics and reveal the existence of an EZH1-SUZ12 sub-complex lacking EED. We provide evidence that EZH1 together with SUZ12 form a non-canonical PRC2 complex, occupy active chromatin domains in the absence of H3K27me3, and positively regulate gene expression. Loss of EZH2 expression leads to global repositioning of EZH1 chromatin occupancy to EZH2 targets. Moreover, we demonstrate that an erythroid-specific enhancer mediates transcriptional activation of EZH1, and a switch from GATA2 to GATA1 controls the developmental EZH1/2 switch by differential association with EZH1 enhancers during erythropoiesis. Thus, the lineage- and developmental stage-specific regulation of PRC2 expression and subunit composition leads to a switch from canonical silencing to non-canonical PRC2 functions during blood stem cell specification. Overall design: Transcriptional profiling in primary human fetal liver proerythroblasts upon lentiviral shRNA-mediated knockdown of EZH1, EZH2, EED, or SUZ12 by RNA-seq analysis.