The evolution of sex determination mechanisms is often accompanied by reduction in dosage of genes on a whole chromosome. Under these circumstances, negatively acting regulatory genes would tend to double the expression of the genome, which produces compensation of the single-sex chromosome and increases autosomal gene expression. Previous work has suggested that to reduce the autosomal expression to the female level, these dosage effects are modified by a chromatin complex specific to males, which sequesters a histone acetylase to the X. The reduced autosomal histone 4 lysine 16 (H4Lys16) acetylation results in lowered autosomal expression, while the higher acetylation on the X is mitigated by the male-specific lethal complex, preventing overexpression. In this report, we examine how mutations in the principal sex determination gene, Sex lethal (Sxl), impact the H4 acetylation and gene expression on both the X and autosomes. When Sxl expression is missing in females, we find that the sequestration occurs concordantly with reductions in autosomal H4Lys16 acetylation and gene expression on the whole. When Sxl is ectopically expressed in Sxl(M) mutant males, the sequestration is disrupted, leading to an increase in autosomal H4Lys16 acetylation and overall gene expression. In both cases we find relatively little effect upon X chromosomal gene expression.