A persistent question in biology is how cis-acting sequence elements influence trans-acting factors and the local chromatin environment to modulate gene expression. We reported previously that the DNA transposon 1360 can enhance silencing of a reporter in a heterochromatic domain of Drosophila melanogaster. We have now generated a collection of variegating phiC31 landing-pad insertion lines containing 1360 and a heat-shock protein 70 (hsp70)-driven white reporter to explore the mechanism of 1360-sensitive silencing. Many 1360-sensitive sites were identified, some in apparently euchromatic domains, although all are close to heterochromatic masses. One such site (line 1198; insertion near the base of chromosome arm 2L) has been investigated in detail. ChIP analysis shows 1360-dependent Heterochromatin Protein 1a (HP1a) accumulation at this otherwise euchromatic site. The phiC31 landing pad system allows different 1360 constructs to be swapped with the full-length element at the same genomic site to identify the sequences that mediate 1360-sensitive silencing. Short deletions over sites with homology to PIWI-interacting RNAs (piRNAs) are sufficient to compromise 1360-sensitive silencing. Similar results were obtained on replacing 1360 with Invader4 (a retrotransposon), suggesting that this phenomenon likely applies to a broader set of transposable elements. Our results suggest a model in which piRNA sequence elements behave as cis-acting targets for heterochromatin assembly, likely in the early embryo, where piRNA pathway components are abundant, with the heterochromatic state subsequently propagated by chromatin modifiers present in somatic tissue.