Epigenetics describes changes in genome function that occur without a change in the DNA sequence. Dosage compensation is a prime example of the regulation of gene expression by an epigenetic mechanism. Dosage compensation has evolved to balance the expression of sex-linked genes in males and females, which possess different numbers of sex chromosomes. However, the genetic sequence of the chromosomes is the same in both sexes. This mechanism therefore needs (1) to function in a sex-specific manner, (2) to target the sex chromosome from amongst the autosomes and (3) to establish and maintain through development a precise, equalised level of gene expression in one sex compared to the other. The process by which dosage compensation is orchestrated has been well characterised in fruit flies and mammals. Although each has evolved a specific dosage-compensation mechanism, these systems share some underlying themes; the molecular components that mediate dosage compensation in both include non-coding RNA molecules, which act as nucleation points for the compensation process. Both systems utilise chromatin-modifying enzymes to remodel large domains of a chromosome. This review will discuss the mechanism of dosage compensation in Drosophila in light of recent developments that have brought into question the previous model of dosage compensation.