Polycomb repressive complex 2 (PRC2) plays crucial roles in transcriptional regulation and stem cell development. However, the context-specific functions associated with alternative subunits remain largely unexplored. Here we show that the related enzymatic subunits EZH1 and EZH2 undergo an expression switch during blood cell development. An erythroid-specific enhancer mediates transcriptional activation of EZH1, and a switch from GATA2 to GATA1 controls the developmental EZH1/2 switch by differential association with EZH1 enhancers. We further examine the in vivo stoichiometry of the PRC2 complexes by quantitative proteomics and reveal the existence of an EZH1-SUZ12 subcomplex lacking EED. EZH1 together with SUZ12 form a non-canonical PRC2 complex, occupy active chromatin, and positively regulate gene expression. Loss of EZH2 expression leads to repositioning of EZH1 to EZH2 targets. Thus, the lineage- and developmental stage-specific regulation of PRC2 subunit composition leads to a switch from canonical silencing to non-canonical functions during blood stem cell specification.