Retinoic Acid-Induced DR2 Alu Transcripts in Stem Cells Generate Functional Small RNAs that Mediate Target mRNA Degradation

While liganded nuclear receptors are well established to regulate Pol II protein-coding transcription units, their role in regulation of DNA repeats remains largely unknown. Here, we report that ~2-3% of the ~1-200,000 human DR2 Alu repeats, particularly those in proximity to retinoic acid-activated Pol II transcription units, are bound and activated by retinoic acid receptor in human embryonic stem cells, triggering their Pol  III-dependent transcription. The non-coding DR2 Alu transcripts are processed in a Dicer-dependent fashion into a series of small RNA products with sizes ranging ~28-65nt and exhibit substantial co-localization with P bodies. These small RNAs cause degradation of a subset of mRNAs critical for the "stem cell" state, which harbor complimentary sequences in their 3' untranslated regions. This regulation requires Ago3- dependent stabilization of full-length and processed DR2 Alu transcripts, and recruitment of Ago3-associated decapping complexes to the target mRNAs. Thus, the RAR/Pol III-dependent DR2 Alu transcriptional program in stem cells serves as a functional complement to the RAR/Pol II-dependent counterpart.