During the X inactivation process, one X chromosome in each female embryonic cell is chosen at random to become coated by Xist RNA and silenced. Tsix, a transcript anti-sense to Xist, participates in the choice of the inactive X and in Xist regulation through as yet unknown mechanisms. Undifferentiated female ES cells, which have two active Xs, recapitulate random X inactivation when induced to differentiate. A 65 kb deletion targeted to one of the two Xs in a female ES cell line, and including both the end of the Xist gene and the site of initiation of Tsix, resulted in the exclusive inactivation of the deleted X in differentiated ES cells. We have re-examined the phenotype of the 65 kb deletion and targeted Tsix and the terminal exons of Xist back to the deleted locus using a cre/loxP site-specific re-insertion strategy. We show that prior to inactivation the deleted X is associated in undifferentiated ES cells with both increased Xist expression and diffusion of the Xist transcript away from its site of synthesis. Restoration of Tsix repressed the steady-state level of Xist expression and restricted Xist RNA to its transcription site. At the onset of inactivation in differentiated ES cells, restoration of Tsix failed to restore random X-inactivation, even though the levels of Xist RNA accumulation in cis were markedly reduced. These results identify for the first time a dual function for Tsix as both a repressor of the steady-state level of Xist expression and as a regulator of the distribution of Xist RNA within the nucleus. They also establish that random inactivation requires mechanisms additional to the in cis repression of XIST: