Co-option of endogenous retroviruses through genetic escape from TRIM28 repression

Endogenous retroviruses (ERVs) have rewired host gene networks. To explore the origins of co-option, we employed an active murine ERV, IAPEz, and an embryonic stem cell (ESC) to neural progenitor cell (NPC) differentiation model. Epigenetic silencing via TRIM28 maps to a 190bp sequence encoding the IAP signal peptide, which confers retrotransposition activity. A subset of ‘escapee’ IAPs (~15%) exhibit significant genetic divergence from this sequence. Canonical repressed IAPs succumb to a previously undocumented demarcation by H3K9me3 and H3K27me3 in NPCs. Escapee IAPs, in contrast, evade epigenetic repression in both cell types, resulting in their transcriptional derepression, particularly in NPCs. We validate the enhancer function of a 47bp sequence within the U3 region of the LTR and show that escapee IAPs convey an activating effect on nearby neural genes. In sum, co-opted ERVs stem from genetic escapees that have lost vital sequences required for both TRIM28 restriction and autonomous retrotransposition. Identification of how sequence divergence from a functional ER-targeting signal, which conferred the active murine endogenous retrovirus IAPs with the ability to retrotranspose, can lead to escape from epigenetic repression and paves the way to co-option of these elements as enhancers.