A large fraction of plant genomes is composed of transposable elements (TE), which provide a potential source of novel genes through “domestication” – the process whereby the proteins encoded by TE diverge in sequence, lose their ability to catalyse transposition and instead acquire novel functions for their hosts. In Arabidopsis, ANTAGONIST OF LIKE HETEROCHROMATIN PROTEIN 1 (ALP1) arose by domestication of the nuclease component of Harbinger class TE and acquired a new function as a component of POLYCOMB REPRESSIVE COMPLEX 2 (PRC2), a histone H3K27me3 methyltransferase involved in regulation of host genes and in some cases TE. It was not clear how ALP1 associated with PRC2, nor what the functional consequence was. Here, we identify ALP2 genetically as a suppressor of Polycomb-group (PcG) mutant phenotypes and show that it arose from the second, DNA binding component of Harbinger transposases. Molecular analysis of PcG compromised backgrounds reveals that ALP genes oppose silencing and H3K27me3 deposition at key PcG target genes. Proteomic analysis reveals that ALP1 and ALP2 are components of a variant PRC2 complex that contains the four core components but lacks plant-specific accessory components such as the H3K27me3 reader LIKE HETEROCHROMATION PROTEIN 1 (LHP1). We show that the N-terminus of ALP2 interacts directly with ALP1, whereas the C-terminus of ALP2 interacts with MULTICOPY SUPPRESSOR OF IRA1 (MSI1), a core component of PRC2. Proteomic analysis reveals that in alp2 mutant backgrounds ALP1 protein no longer associates with PRC2, consistent with a role for ALP2 in recruitment of ALP1. We suggest that the propensity of Harbinger TE to insert in gene-rich regions of the genome, together with the modular two component nature of their transposases, has predisposed them for domestication and incorporation into chromatin modifying complexes.