The suppressor of Hairy-wing [su(Hw)] gene encodes a zinc finger protein that binds to a repeated motif in the gypsy retrotransposon. These DNA sequences, called the su(Hw)-binding region, have properties of an insulator region because they (1) disrupt enhancer/silencer function in a position-dependent manner and (2) protect the mini-white gene from both euchromatic and heterochromatic position effects. To gain further insights into the types of position effects that can be insulated, we determined the effects of the su(Hw)-binding region on dosage compensation of the X-linked mini-white gene. Dosage compensation is the process that equalizes the unequal content of X-linked genes in males and females by increasing the X-linked transcription level twofold in males. Transposition of X-linked genes to the autosomes commonly results in incomplete dosage compensation, indicating that the distinct male X chromatin environment is important for this process. We found that dosage compensation of autosomally integrated mini-white genes flanked by su(Hw)-binding regions was greatly improved, such that complete or nearly complete compensation was observed at the majority of insertion sites. The su(Hw) protein was essential for this enhanced dosage compensation because in a su(Hw) mutant background compensation was incomplete. These experiments provide evidence that the su(Hw)-binding region facilitates dosage compensation of the mini-white gene on the autosomes. This may result from protection of the mini-white gene from a negative autosomal chromatin environment.