Jumonji (Jmj) is a transcriptional repressor that plays important roles in the suppression of cell proliferation and development of various tissues in the mouse. To further clarify the roles of Jmj during development and gain insight into mechanisms of Jmj-mediated transcriptional regulation, we have taken advantage of Drosophila as a model organism. Drosophila Jmj (dJmj) shares high homology with mammalian Jmj in the JmjN, JmjC and AT-rich interaction domains, as well as in the N-terminal repression domain. dJmj localizes to hundreds of euchromatic sites but not to chromocenter heterochromatin on salivary gland polytene chromosomes. In addition, dJmj is excluded from regions stained with an antibody against Ser5-phosphorylated RNA polymerase II, suggesting a function of dJmj in transcriptionally inactive chromatin. Loss of djmj results in larval and pupal lethality with phenotypes similar to those observed in mutants of ecdysone-regulated genes, implying the involvement of dJmj in the repression of gene expression in the ecdysone pathway. Transgenic mouse Jmj mostly colocalizes with dJmj and partially rescues the phenotypes of djmj mutants, indicating that dJmj is a functional homolog of mammalian Jmj. Furthermore, mutation in djmj suppresses position effect variegation of the T(2;3)SbV rearrangement. These findings suggest that dJmj controls expression of developmentally important genes through modification of chromatin into a transcriptionally silenced state.