Drosophila melanogaster heterochromatin protein 1 (HP1a or HP1) is believed to be involved in active transcription, transcriptional gene silencing and the formation of heterochromatin. But little is known about the function of HP1 during development. Using a Gal4-induced RNA interference system, we showed that conditional depletion of HP1 in transgenic flies resulted in preferential lethality in male flies. Cytological analysis of mitotic chromosomes showed that HP1 depletion caused sex-biased chromosomal defects, including telomere fusions. The global levels of specific histone modifications, particularly the hallmarks of active chromatin, were preferentially increased in males as well. Expression analysis showed that approximately twice as many genes were specifically regulated by HP1 in males than in females. Furthermore, HP1-regulated genes showed greater enrichment for HP1 binding in males. Taken together, these results indicate that HP1 modulates chromosomal integrity, histone modifications and transcription in a sex-specific manner.