Polycomb Group (PcG) proteins are part of an epigenetic cell memory system that plays essential roles in multicellular development, stem cell biology, X chromosome inactivation, and cancer. In animals, plants, and many fungi, Polycomb Repressive Complex 2 (PRC2) catalyzes trimethylation of histone H3 lysine 27 (H3K27me3) to assemble transcriptionally repressed facultative heterochromatin. PRC2 is structurally and functionally conserved in the model fungus Neurospora crassa, and recent work in this organism has generated insights into PRC2 control and function. To identify components of the facultative heterochromatin pathway, we performed a targeted screen of Neurospora deletion strains lacking individual ATP-dependent chromatin remodeling enzymes. We found the Neurospora homolog of IMITATION SWITCH (ISW) is critical for normal transcriptional repression, nucleosome organization, and establishment of typical histone methylation patterns in facultative heterochromatin domains. We also found that stable interaction between PRC2 and chromatin depends on ISW. A functional ISW ATPase domain is required for gene repression and normal H3K27 methylation. ISW homologs interact with accessory proteins to form multiple complexes with distinct functions. Using proteomics and molecular approaches, we identified three distinct Neurospora ISW-containing complexes. A triple mutant lacking three ISW accessory factors and disrupting multiple ISW complexes led to widespread up-regulation of PRC2 target genes and altered H3K27 methylation patterns, similar to an ISW-deficient strain. Taken together, our data show that ISW is a key component of the facultative heterochromatin pathway in Neurospora, and that distinct ISW complexes perform an apparently overlapping role to regulate chromatin structure and gene repression at PRC2 target domains.