Gametes carry parental genetic material to the next generation. Stress-induced epigenetic changes in the germ line can be inherited and can have a profound impact on offspring development. However, the molecular mechanisms and consequences of transgenerational epigenetic inheritance are poorly understood. We found that Drosophila oocytes transmit the repressive histone mark H3K27me3 to their offspring. Maternal contribution of the histone methyltransferase Enhancer of zeste, the enzymatic component of Polycomb repressive complex 2, is required for active propagation of H3K27me3 during early embryogenesis. H3K27me3 in the early embryo prevents aberrant accumulation of the active histone mark H3K27ac at regulatory regions and precocious activation of lineage-specific genes at zygotic genome activation. Disruption of the germ line–inherited Polycomb epigenetic memory causes embryonic lethality that cannot be rescued by late zygotic reestablishment of H3K27me3. Thus, maternally inherited H3K27me3, propagated in the early embryo, regulates the activation of enhancers and lineage-specific genes during development.