Endogenous retroviruses co-opted into divergently transcribed regulatory elements shape the regulatory landscape of embryonic stem cells

Transcription factor binding to regulatory elements is the key process underlying gene regulation during cellular differentiation. Although the specific regulation of genes by transcription factors is generally conserved, regulatory elements themselves are associated with high evolutionary turnover, a process that has been attributed to transposable elements. However, it is unclear how frequent co-option of transposable elements into regulatory elements is and to which regulatory programs they contribute. Here, we report an in-depth characterization of the transposon-derived regulatory landscape of mouse embryonic stem cells. We demonstrate that a substantial number of endogenous retroviral elements are divergently transcribed into unstable RNAs, and that these elements contribute to a sizable proportion of active enhancers and gene promoters. We further show that transposon subfamilies contribute to specific regulatory programs through their enrichment of binding sites for transcription factors, shedding light on the formation of regulatory programs and the origins of regulatory elements.