The Drosophila BEAF-32A and BEAF-32B proteins bind to the scs' insulator and to hundreds of other sites on Drosophila chromosomes. These two proteins are encoded by the same gene. We used ends-in homologous recombination to generate the null BEAF(AB-KO) allele and also isolated the BEAF(A-KO) allele that eliminates production of only the BEAF-32A protein. We find that the BEAF proteins together are essential, but BEAF-32B alone is sufficient to obtain viable flies. Our results show that BEAF is important for both oogenesis and development. Maternal or zygotic BEAF is sufficient to obtain adults, although having only maternal BEAF impairs female fertility. In the absence of all BEAF, a few fertile but sickly males are obtained. Using both a chromosomal position-effect assay and an enhancer-blocking assay, we find that BEAF is necessary for scs' insulator function. Lack of BEAF causes a disruption of male X polytene chromosome morphology. However, we did not find evidence that dosage compensation was affected. Position-effect variegation of the w(m4h) allele and different variegating y transgenes was enhanced by the knockout mutation. Combined with the effects on male X polytene chromosomes, we conclude that BEAF function affects chromatin structure or dynamics.