In vitro data suggest that the human RbAp46 and RbAp48 genes encode proteins involved in multiple chromatin remodeling complexes and are likely to play important roles in development and tumor suppression. However, to date, our understanding of the role of RbAp46/RbAp48 and its homologs in metazoan development and disease has been hampered by a lack of insect and mammalian mutant models, as well as redundancy due to multiple orthologs in most organisms studied. Here, we report the first mutations in the single Drosophila RbAp46/RbAp48 homolog Caf1, identified as strong suppressors of a senseless overexpression phenotype. Reduced levels of Caf1 expression result in flies with phenotypes reminiscent of Hox gene misregulation. Additionally, analysis of Caf1 mutant tissue suggests that Caf1 plays important roles in cell survival and segment identity, and loss of Caf1 is associated with a reduction in the Polycomb Repressive Complex 2 (PRC2)-specific histone methylation mark H3K27me3. Taken together, our results suggest suppression of senseless overexpression by mutations in Caf1 is mediated by participation of Caf1 in PRC2-mediated silencing. More importantly, our mutant phenotypes confirm that Caf1-mediated silencing is vital to Drosophila development. These studies underscore the importance of Caf1 and its mammalian homologs in development and disease.