Constitutive heterochromatic regions of chromosomes are those that remain condensed through most or all of the cell cycle. In Drosophila melanogaster, the constitutive heterochromatic regions, located around the centromere, contain a number of gene loci, but at a much lower density than euchromatin. In the autosomal heterochromatin, the gene loci appear to be unique sequence genes interspersed among blocks of highly repeated sequences. Euchromatic genes do not function well when brought into the vicinity of heterochromatin (position-effect variegation). We test the possibility that the blocks of centromeric heterochromatin provide an environment essential for heterochromatic gene function. To assay directly the functional requirement of autosomal heterochromatic genes to reside in heterochromatin, the rolled (rl) gene, which is normally located deep in chromosome 2R heterochromatin, was relocated within small blocks of heterochromatin to a variety of euchromatic positions by successive series of chromosomal rearrangements. The function of the rl gene is severely affected in rearrangements in which the rl gene is isolated in a small block of heterochromatin, and these position effects can be reverted by rearrangements which bring the rl gene closer to any large block of autosomal or X chromosome heterochromatin. There is some evidence that five other 2R heterochromatic genes are also affected among these rearrangements. These findings demonstrate that the heterochromatic genes, in contrast to euchromatic genes whose function is inhibited by relocation to heterochromatin, require proximity to heterochromatin to function properly, and they argue strongly that a major function of the highly repeated satellite DNA, which comprises most of the heterochromatin, is to provide this heterochromatic environment.