USP7 is a protein deubiquitinase with an essential role in development. Here, we provide evidence that USP7 regulates the activity of the Polycomb Repressive Complex 1 (PRC1) in coordination with SCML2. There are six versions of PRC1 defined by the association of one of the PCGF homologues (PCGF1-6) with the common catalytic subunit RING1B. First, we show that SCML2, a Polycomb group protein that associates with PRC1.2 (containing PCGF2/MEL18) and PRC1.4 (containing PCGF4/BMI1), modulates the localization of USP7 and bridges USP7 with PRC1.4, allowing for stabilization of BMI1. ChIP experiments demonstrate that USP7 is found at SCML2 and BMI1 target genes. Second, inhibition of USP7 leads to a reduction in ubiquitinated histone H2A (H2Aub), the catalytic product of PRC1 and key for its repressive activity. USP7 regulates the post-translational status of RING1B and BMI1, a specific component of PRC1.4. Thus, USP7 not only stabilizes PRC1 components, but its catalytic activity is necessary to maintain a functional PRC1, thereby ensuring appropriate levels of repressive H2Aub.