Polycomb Group (PcG) proteins silence critical developmental genes and modulate cell proliferation. Using the Drosophila melanogaster eye as a model system, we show that cells with mutations in the gene locus (ph) that encodes the PcG protein Polyhomeotic (PH) overproliferate and lose both the ability to differentiate and their normal polarity. They invade the neighboring tissues and, when combined with an activated form of the Ras proto-oncogene, they trigger the formation of metastases. PcG proteins bind to multiple genes in the Notch pathway and control their transcription as well as Notch signaling. The massive cell-autonomous overproliferation of ph mutant cell clones can be rescued by ectopic expression of a dominant negative form of Notch or by RNA interference (RNAi)-mediated repression of Notch. Conversely, overexpression of ph induces a small-eye phenotype that is rescued by activation of Notch signaling. These data show that ph is a tumor suppressor locus that controls cellular proliferation by silencing multiple Notch signaling components.