Changes in chromatin composition accompany cellular differentiation in eukaryotes. Although bulk chromatin is duplicated during DNA replication, replication-independent (RI) nucleosome replacement occurs in transcriptionally active chromatin and during specific developmental transitions where the genome is repackaged. In most animals, replacement uses the conserved H3.3 histone variant, but the functions of this variant have not been defined. Using mutations for the two H3.3 genes in Drosophila, we identify widespread transcriptional defects in H3.3-deficient animals. We show that mutant animals compensate for the lack of H3.3 in two ways: they upregulate the expression of the major histone H3 genes, and they maintain chromatin structure by using H3 protein for RI nucleosome replacement at active genes. Rescue experiments show that increased expression of H3 is sufficient to relieve transcriptional defects. In contrast, H3.3 is essential for male fertility, and germline cells specifically require the histone variant. Defects without H3.3 first occur around meiosis, resulting in a failure to condense, segregate, and reorganize chromatin. Rescue experiments with mutated transgenes demonstrate that H3.3-specific residues involved in RI nucleosome assembly-but not major histone modification sites-are required for male fertility. Our results imply that the H3.3 variant plays an essential role in chromatin transitions in the male germline.