Dosage compensation is an essential process that equalizes transcript levels of X-linked genes between sexes by forming a domain of coordinated gene expression. Throughout the evolution of Diptera, many different X-chromosomes acquired the ability to be dosage compensated. Once each newly evolved X-chromosome is targeted for dosage compensation in XY males, its active genes are upregulated two-fold to equalize gene expression with XX females. In Drosophila melanogaster, the CLAMP zinc finger protein links the dosage compensation complex to the X-chromosome. However, the mechanism for X-chromosome identification has remained unknown. Here, we combine biochemical, genomic and evolutionary approaches to reveal that expansion of GA-dinucleotide repeats likely accumulated on the X-chromosome over evolutionary time to increase the density of CLAMP binding sites, thereby driving the evolution of dosage compensation. Overall, we present new insight into how subtle changes in genomic architecture, such as expansions of a simple sequence repeat, promote the evolution of coordinated gene expression.