The Su(var)3-7 protein is essential for fly viability, and several lines of evidence support its key importance in heterochromatin formation: it binds to pericentric heterochromatin, it potently suppresses variegation and it interacts with HP1. However, the mode of action of Su(var)3-7 is poorly understood. Here we investigate in vivo the consequences of increased Su(var)3-7 expression on fly viability and chromatin structure. A large excess of Su(var)3-7 induces lethality, whereas lower doses permit survival and cause spectacular changes in the morphology of polytene chromosomes in males, and to a lesser extent in females. The male X is always the most affected chromosome: it becomes highly condensed and shortened, and its characteristic banding pattern is modified. In addition, Su(var)3-7 was found over the complete length of all chromosomes. This event coincides with the appearance of heterochromatin markers such as histone H3K9 dimethylation and HP1 at many sites on autosomes and, more strikingly, on the male X chromosome. These two features are strictly dependent on the histone-methyltransferase Su(var)3-9, whereas the generalised localisation of Su(var)3-7 is not. These data provide evidence for a dose-dependent regulatory role of Su(var)37 in chromosome morphology and heterochromatin formation. Moreover they show that Su(var)3-7 expression is sufficient to induce Su(var)3-9-dependent ectopic heterochromatinisation and suggest a functional link between Su(var)3-7 and the histone-methyltransferase Su(var)3-9.