MSL proteins and noncoding roX RNAs form complexes to up-regulate hundreds of genes on the Drosophila male X chromosome, and make X-linked gene expression equal in males and females. Altering the ratio of MSL proteins to roX RNA dramatically changes X-chromosome morphology. In protein excess, the MSL complex concentrates near sites of roX transcription and is depleted elsewhere. These results support a model for distribution of MSL complexes, in which local spreading in cis from roX genes is balanced with diffusion of soluble complexes in trans. When overexpressed, MSL proteins can recognize the X chromosome, modify histones, and partially restore male viability even in the absence of roX RNAs. Thus, the protein components can carry out all essential functions of dosage compensation, but roX RNAs facilitate the correct targeting of MSL complexes, in part by nucleation of spreading from their sites of synthesis.