Heterochromatic gene silencing results from the establishment of a repressive chromatin structure over reporter genes. Gene silencing is often variegated, implying that chromatin may stochastically switch from repressive to permissive structures as cells divide. To identify remodeling enzymes involved in reorganizing heterochromatin, we tested 11 SNF2-type chromatin remodelers in Drosophila for effects on gene silencing. Overexpression of five remodelers affects gene silencing, and the most potent de-repressor is the alpha-thalassaemia mental retardation syndrome X-linked (ATRX) homolog X-linked nuclear protein (XNP). Although the mammalian ATRX protein localizes to heterochromatin, Drosophila XNP is not a general component of heterochromatin. Instead, XNP localizes to active genes and to a major focus near the heterochromatin of the X chromosome. The XNP focus corresponds to an unusual decondensed satellite DNA block, and both active genes and the XNP focus are sites of ongoing nucleosome replacement. We suggest that the XNP remodeler modulates nucleosome dynamics at its target sites to limit chromatin accessibility. Although XNP at active genes may contribute to gene silencing, we find that a single focus is present across Drosophila species and that perturbation of this site cripples heterochromatic gene silencing. Thus, the XNP focus appears to be a functional genetic element that can contribute to gene silencing throughout the nucleus.