Chromatin remodeling is crucial for gene regulation. Remodeling is often mediated through chemical modifications of the DNA template, DNA-associated proteins, and RNA-mediated processes. Y-linked regulatory variation (YRV) refers to the quantitative effects that polymorphic tracts of Y-linked chromatin exert on gene expression of X-linked and autosomal genes. Here we show that naturally occurring polymorphisms in the Drosophila melanogaster Y chromosome contribute disproportionally to gene expression variation in the testis. The variation is dependent on wild-type expression levels of mod(mdg4) as well as Su(var)205; the latter gene codes for heterochromatin protein 1 (HP1) in Drosophila. Testis-specific YRV is abolished in genotypes with heterozygous loss-of-function mutations for mod(mdg4) and Su(var)205 but not in similar experiments with JIL-1. Furthermore, the Y chromosome differentially regulates several ubiquitously expressed genes. The results highlight the requirement for wild-type dosage of Su(var)205 and mod(mdg4) in enabling naturally occurring Y-linked regulatory variation in the testis. The phenotypes that emerge in the context of wild-type levels of the HP1 and Mod(mdg4) proteins might be part of an adaptive response to the environment. C HROMATIN-REMODELING proteins are crucial in gene regulation and usually exert their function through chemical modifications of the DNA template, DNA-associated proteins, and RNA-mediated processes (Muller and Leutz 2001;Ng and Gurdon 2008;Brien and Bracken 2009). However, in fruit flies, DNA methylation is either absent or occurs at extremely low levels (Lyko et al. 2000;Phalke et al. 2009;Gou et al. 2010;Schaefer and Lyko 2010), such that the structure of chromatin might be entirely determined by protein modifications and RNA-mediated processes. The posttranslational modifications of histones and DNA-binding proteins modulate the physical structure of DNA and ultimately regulate gene expression (Spencer and Davie 1999;Kouzarides 2007;Bonasio et al. 2010). Classical chromatinremodeling proteins were classified based on their ability to modulate the spreading of heterochromatin at the boundaries between the domains of euchromatin and heterochromatin. Accordingly, genetic screens identified chromatin regulators in Drosophila using the white gene allele w(m4), in which the wild-type white gene is repositioned at a boundary between chromatin domains (position effect variegation, or PEV) (Ashburner et al. 2005). The studies uncovered .200 proteins with the ability to modulate chromatin states and enhance or suppress PEV (Henikoff 1990;Gelbart et al. 1997;Schotta et al. 2003;Ashburner et al. 2005;Tweedie et al. 2009). A small number of those modifiers have been mapped and functionally studied at the molecular level.Heterochromatin protein 1 (HP1) is a classical nonhistone chromatin protein. HP1 is encoded by the Su(var) 205 gene in Drosophila and localizes throughout the genome in euchromatic and heterochromatic sites. However, the protein is more abundant in ...