Conditional knock-out (KO) of Polycomb Group (PcG) protein YY1 results in pro-B cell arrest and reduced immunoglobulin locus contraction needed for distal variable gene rearrangement. The mechanisms that control these crucial functions are unknown. We deleted the 25 amino-acid YY1 REPO domain necessary for YY1 PcG function, and used this mutant (YY1ΔREPO), to transduce bone marrow from YY1 conditional KO mice. While wild-type YY1 rescued B-cell development, YY1ΔREPO failed to rescue the B-cell lineage yielding reduced numbers of B lineage cells. Although the IgH rearrangement pattern was normal, there was a selective impact at the Igκ locus that showed a dramatic skewing of the expressed Igκ repertoire. We found that the REPO domain interacts with proteins from the condensin and cohesin complexes, and that YY1, EZH2 and condensin proteins co-localize at numerous sites across the Ig kappa locus. Knock-down of a condensin subunit protein or YY1 reduced rearrangement of Igκ Vκ genes suggesting a direct role for YY1-condensin complexes in Igκ locus structure and rearrangement.