Polycomb-repressive complex 2 (PRC2) facilitates the maintenance and inheritance of chromatin domains repressive to transcription through catalysis of methylation of histone H3 at Lys27 (H3K27me2/3). However, through its EZH2 subunit, PRC2 also binds to nascent transcripts from active genes that are devoid of H3K27me2/3 in embryonic stem cells. Here, biochemical analyses indicated that RNA interaction inhibits SET domain-containing proteins, such as PRC2, nonspecifically in vitro. However, CRISPR-mediated truncation of a PRC2-interacting nascent RNA rescued PRC2-mediated deposition of H3K27me2/3. That PRC2 activity is inhibited by interactions with nascent transcripts supports a model in which PRC2 can only mark for repression those genes silenced by transcriptional repressors.