Many species have dissimilar sex chromosomes. Dosage compensation is an essential process that modulatesexpression to equalize the ratio of X:A gene products in both sexes. Drosophila melanogaster achieves dosage compensation by transcribing male X-linked genes at twice the rate as females. This is accomplished by the Male Specific Lethal (MSL) complex, which binds the X, modifies chromatin and increases expression. The siRNA pathway contributes to X-localization of the MSL complex, but no RNAi components directly interact with the MSL complex. This suggests that the siRNA pathway acts through a novel and indirect mechanism. For example, an Ago2-containing complex could bind nascent RNAs from the X chromosome and recruit activities that alter epigenetic marks or chromatin architecture. This might facilitate MSL recruitment and spreading along the X-chromosome. To test this model, we used publically available databases to assemble a network of proteins that interact with Ago2. These formed the basis of a targeted screen that has identified several Ago2-interacting proteins that contribute to dosage compensation. Some of these are known to modify chromatin. I then used Chromatin ImmunoPrecipitation(ChIP) to demonstrate that members of the Ago2-interaction network maintain chromatin marks on the X chromosome. This analysis is now being extended to examine the interacting proteins themselves. This study addresses the molecular mechanism by which Ago2 contributes to X-recognition and will provide a useful model for how small RNA contributes to coordinated regulation of broad chromosomal domains in eukaryotes.