INTRODUCTION Position-effect variegation (PEV) in Drosophila is an example of how chromatin compaction/relaxation processes modulate gene activity (for recent reviews, see Elgin, 1996; Henikoff, 1996; Wakimoto, 1998; Zhimulev, 1998). PEV is associated with chromosomal rearrangements where genes juxtaposed to new euchromatin/heterochromatin boundaries are randomly turned on or off, depending on whether the environment is relaxed (euchromatic) or condensed (heterochromatic). As the decision to express the gene or not is clonally inherited during development, the phenomenon gives rise to adult structures containing a mix of phenotypically distinct groups of cells (Reuter and Spierer, 1992). Two series of data have reinforced the link between PEV and chromatin structure. First, the chromosomal domain subjected to PEV becomes cytogenetically distinguishable as a dense block of chromatin, (Zhimulev et al., 1989). Second, variegating inserts exhibit reduced accessibility to restriction enzymes (Wallrath and Elgin, 1995). A number of second-site mutations and chromosomal rearrangements that modify variegation have been studied, demonstrating that PEV is influenced by cis- and trans-acting factors. On one side, PEV is subjected to the dosage of heterochromatic DNA, which mostly consists of repetitive sequences (Gatti and Pimpinelli, 1992). For example, tandemly repeated rDNA cistrons influence PEV in a dose-dependent manner (Hilliker and Appels, 1982; Spofford and DeSalle, 1991), since rDNA deletion or amplification induces PEV enhancement or suppression, respectively. On the other side, PEV is regulated by trans-acting factors. More than one hundred modifier mutations has been identified in Drosophila (Reuter and Spierer, 1992; Zhimulev, 1998). Although only a few of the corresponding transcription units are identified to date, the nature of encoded products, chromosomal proteins or modifiers of chromosomal proteins, are consistent with a role in chromatin structure modulation (Elgin, 1996). The modifier of PEV modulo (mod) is essential for development and several recessive lethal amorphic mutations in this gene have been isolated that display a dominant 2753 Journal of Cell Science 111, 2753-2761 (1998) Printed in Great Britain © The Company of Biologists Limited 1998 JCS4579 modulo belongs to the class of Drosophila genes named ‘suppressor of position-effect variegation’, suggesting the involvement of the encoded protein in chromatin compaction/relaxation processes. Using complementary procedures of cell fractionation, immunolocalisation on mitotic and polytene chromosomes and cross- linking/immunoprecipitation of genomic DNA targets, we have analysed the sub-nuclear distribution of Modulo. While actually associated to condensed chromatin and heterochromatin sites, the protein is also abundantly found at nucleolus. From a comparison of Modulo pattern on chromosomes of different cell types and mutant lines, we propose a model in which the nucleolus balances the Modulo protein available for chromatin compaction and PEV modification. At a molecular level, repetitive elements instead of rDNA constitute Modulo DNA targets, indicating that the protein directly contacts DNA in heterochromatin but not at the nucleolus. Consistent with a role for Modulo in nucleolus activity and protein synthesis capacity, somatic clones homozygous for a null mutation express a cell- autonomous phenotype consisting of growth alteration and short slender bristles, characteristic traits of Minute mutations, which are known to affect ribosome biogenesis. The results provide evidence suggesting that Modulo participates in distinct molecular networks in the nucleolus and heterochromatin and has distinct functions in the two compartments. Key words: Drosophila, Position-effect variegation, Heterochromatin, Nucleolus, Modulo target, Clonal analysis SUMMARY Dynamics of the sub-nuclear distribution of Modulo and the regulation of position-effect variegation by nucleolus in Drosophila L. Perrin 1,‡ , O. Demakova 2 , L. Fanti 3,4 , S. Kallenbach 1 , S. Saingery 1 , N. I. Mal’ceva 2 , S. Pimpinelli 4 , I. Zhimulev 2 and J. Pradel 1, * 1 Laboratoire de Génétique et de Physiologie du Développement, Institut de Biologie du Développement de Marseille, CNRS/INSERM/Université de la Méditerranée/AP de Marseille, Campus de Luminy Case 907. 13288 Marseille cedex 9, France 2 Institute of Cytology and Genetics, Russian Academy of Sciences, Acad. Lavrentiev Ave, 10, 630090 Novosibirsk, Russia 3 Istituo di Genetica, Univ. di Bari, V. Amendola 165/A, 70126 Bari, Italy 4 Dip. Genetica e Biologia Molecolare, Univ. La Sapienza, P. Aldo Moro, 500185 Roma, Italy ‡ Present address: Institut de Génétique Humaine, UPR 1142 du CNRS, 141 rue de la Cardonille, 34396 Montpellier Cedex 5, France *Author for correspondence (e-mail: pradel@lgpd.univ-mrs.fr) Accepted 8 July; published on WWW 27 August 1998