Tumor cell plasticity contributes to functional and morphologic heterogeneity. To uncover the underlying mechanisms of this plasticity, we examined glioma stem-like cells (GSC) where we found that the biologic interconversion between GSCs and differentiated non-GSCs is functionally plastic and accompanied by gain or loss of polycomb repressive complex 2 (PRC2), a complex that modifies chromatin structure. PRC2 mediates lysine 27 trimethylation on histone H3 and in GSC it affected pluripotency or development-associated genes (e. g., Nanog, Wnt1, and BMP5) together with alterations in the subcellular localization of EZH2, a catalytic component of PRC2. Intriguingly, exogenous expression of EZH2-dNLS, which lacks nuclear localization sequence, impaired the repression of Nanog expression under differentiation conditions. RNA interference (RNAi)-mediated attenuation or pharmacologic inhibition of EZH2 had little to no effect on apoptosis or bromodeoxyuridine incorporation in GSCs, but it disrupted morphologic interconversion and impaired GSC integration into the brain tissue, thereby improving survival of GSC-bearing mice. Pathologic analysis of human glioma specimens revealed that the number of tumor cells with nuclear EZH2 is larger around tumor vessels and the invasive front, suggesting that nuclear EZH2 may help reprogram tumor cells in close proximity to this microenvironment. Our results indicate that epigenetic regulation by PRC2 is a key mediator of tumor cell plasticity, which is required for the adaptation of glioblastoma cells to their microenvironment. Thus, PRC2-targeted therapy may reduce tumor cell plasticity and tumor heterogeneity, offering a new paradigm for glioma treatment.