Dosage compensation in Drosophila occurs by an increase in transcription of genes on the X chromosome in males. This elevated expression requires the function of at least four loci, known collectively as the male-specific lethal (msl) genes. The proteins encoded by two of these genes, maleless (mle) and male-specific lethal-1 (msl-1), are found associated with the X chromosome in males, suggesting that they act as positive regulators of dosage compensation. A specific acetylated isoform of histone H4, H4Ac16, is also detected predominantly on the male X chromosome. We have found that MLE and MSL-1 bind to the X chromosome in an identical pattern and that the pattern of H4Ac16 on the X is largely coincident with that of MLE/MSL-1. We fail to detect H4Ac16 on the X chromosome in homozygous msl males, correlating with the lack of dosage compensation in these mutants. Conversely, in Sxl mutants, we detect H4Ac16 on the female X chromosomes, coincident with an inappropriate increase in X chromosome transcription. These data suggest that synthesis or localization of H4Ac16 is controlled by the dosage compensation regulatory hierarchy. Dosage compensation may involve H4Ac16 function, potentially through interaction with the product of the msl genes.