Human MED26 was originally purified in the cofactor required for the Sp1 activation complex (CRSP) as a 70-kDa component named CRSP70. This polypeptide was specific to metazoans and the “small” form of the Mediator complex. We report here that a Drosophila melanogaster homologue of MED26 similarly interacts with other components of the core Drosophila Mediator complex but not with the kinase module and is recruited to genes upon activation. Using a null allele of Med26, we show that Med26 is required for organismal viability but not for cell proliferation or survival. Clones lacking Med26 in the wing disc lead to loss of the adult wing margin and reduced expression of genes involved in wing margin formation. Surprisingly, when polytene chromosomes from the salivary gland were examined using antibodies to Med26, it was apparent that a fraction of the protein was associated with the chromocenter, which contains pericentric heterochromatin. This staining colocalizes with heterochromatin protein 1 (HP1). Immunoprecipitation experiments show that Med26 interacts with HP1. The interaction is mediated through the chromoshadow domain of HP1 and through the conserved motif in the carboxy terminus of the Med26 protein. This work is the first characterization of the metazoan-specific Mediator subunit in an animal model.