Lethal malignant brain tumors (lmbt) result from the loss of the conserved transcriptional repressor l(3)mbt, in Drosophila melanogaster. Similar mutations in the human homolog L3MBTL1 correlate with some cancers. The protein's C-terminal MBT repeats bind mono and dimethylated histones in vitro, which could influence recruitment of L3MBTL1 to its target sites. The L(3)mbt chromatin targeting mechanism, however, is controversial and several studies suggest insufficiency or a minor role for histone methylation in determining the site specificity for recruitment. We report that L(3)mbt colocalizes with core members of the Myb-MuvB/DREAM (MMB/DREAM) transcriptional regulatory complex genome-wide, and that L(3)mbt-mediated repression requires this complex in salivary glands and larval brains. Loss of l(3)mbt or of MMB components through mutation cause similar spurious expression of genes, including the transposon regulatory gene piwi, in terminally differentiated cells. The DNA-binding MMB core component Mip120 (Lin54) is required for L(3)mbt recruitment to chromosomes, whereas Mip130 (Lin9) (an MMB core protein) and E2f2 (an MMB transcriptional repressor) are not, but are essential for repression. Cytolocalization experiments suggest the presence of site-specific differential composition of MMB in polytene chromosomes where some loci were bound by a Myb-containing or alternatively, an E2f2 and L(3)mbt form of the complex.