The new transcriptional coactivator SAYP binds at many sites to transcriptionally active chromatin of polytene chromosomes, colocalizes with RNA polymerase II, and coactivates transcription. On the other hand, SAYP is present in heterochromatic regions of chromosome IV and in the chromocenter and suppresses transcription of transgenes located in heterochromatin. The conserved SAY domain of SAYP is involved in transcription activation, while its PHD domains are responsible for gene silencing in heterochromatin. Thus, SAYP plays a dual role in regulating transcription in euchromatic and heterochromatic regions.