The ribonucleoprotein Male Specific Lethal (MSL) complex is required for X chromosome dosage compensation in Drosophila melanogaster males. Beginning at 3 h of development the MSL complex binds transcribed X-linked genes and modifies chromatin. A subset of MSL complex proteins, including MSL1 and MSL3, is also necessary for full expression of autosomal heterochromatic genes in males, but not females. Loss of the non-coding roX RNAs, essential components of the MSL complex, lowers the expression of heterochromatic genes and suppresses position effect variegation (PEV) only in males, revealing a sex-limited disruption of heterochromatin. To explore the molecular basis of this observation we examined additional proteins that participate in compensation and found that MLE, but not Jil-1 kinase, contributes to heterochromatic gene expression. To determine if identical regions of roX RNA are required for dosage compensation and heterochromatic silencing, we tested a panel of roX1 transgenes and deletions and find that the X chromosome and heterochromatin functions are separable by some mutations. Chromatin immunoprecipitation of staged embryos revealed widespread autosomal binding of MSL3 before and after localization of the MSL complex to the X chromosome at 3 h AEL. Autosomal MSL3 binding was dependent on MSL1, supporting the idea that a subset of MSL proteins associates with chromatin throughout the genome during early development. The broad localization of these proteins early in embryogenesis supports the idea of direct action at autosomal sites. We postulate that this may contribute to the sex-specific differences in heterochromatin that we, and others, have noted.