The role of DNA sequence in determining chromatin state is incompletely understood. We have previously demonstrated that large chromosomal segments from human cells recapitulate their native chromatin state in mouse cells, but the relative contribution of local sequences versus their genomic context remains unknown. In this study, we compare orthologous chromosomal regions for which the human locus establishes prominent sites of Polycomb complex recruitment in pluripotent stem cells, whereas the corresponding mouse locus does not. Using recombination-mediated cassette exchange at the mouse locus, we establish the primacy of local sequences in the encoding of chromatin state. We show that the signal for chromatin bivalency is redundantly encoded across a bivalent domain and that this reflects competition between Polycomb complex recruitment and transcriptional activation. Furthermore, our results suggest that a high density of unmethylated CpG dinucleotides is sufficient for vertebrate Polycomb recruitment. This model is supported by analysis of DNA methyltransferase-deficient embryonic stem cells.