Dosage compensation ensures similar levels of X-linked gene products in males (XY or XO) and females (XX), despite their different numbers of X chromosomes. In mammals, flies, and worms, dosage compensation is mediated by a specialized machinery that localizes to one or both of the X chromosomes in one sex resulting in a change in gene expression from the affected X chromosome(s). In mammals and flies, dosage compensation is associated with specific histone posttranslational modifications and replacement with variant histones. Until now, no specific histone modifications or histone variants have been implicated in Caenorhabditis elegans dosage compensation. Taking a candidate approach, we have looked at specific histone modifications and variants on the C. elegans dosage compensated X chromosomes. Using RNAi-based assays, we show that reducing levels of the histone H2A variant, H2A.Z (HTZ-1 in C. elegans), leads to partial disruption of dosage compensation. By immunofluorescence, we have observed that HTZ-1 is under-represented on the dosage compensated X chromosomes, but not on the non-dosage compensated male X chromosome. We find that reduction of HTZ-1 levels by RNA interference (RNAi) and mutation results in only a very modest change in dosage compensation complex protein levels. However, in these animals, the X chromosome–specific localization of the complex is partially disrupted, with some nuclei displaying DCC localization beyond the X chromosome territory. We propose a model in which HTZ-1, directly or indirectly, serves to restrict the dosage compensation complex to the X chromosome by acting as or regulating the activity of an autosomal repellant.