Higher order chromatin organization influences gene expression, but mechanisms by which this phenomenon occurs are not well understood. RNA silencing, a conserved mechanism that involves small RNAs bound to an Argonaute protein, mediates gene expression via transcriptional or post-transcriptional regulation. Recently, a role for RNA silencing in chromatin has been emerging. In fission yeast, a major role of RNA interference (RNAi) is to establish pericentromeric heterochromatin. However, whether this mechanism is conserved throughout evolution is unclear. In Drosophila, a powerful model organism, there are multiple functionally distinct RNA silencing pathways. Previous studies have suggested the involvement of the Piwi-interacting RNA (piRNA) and endogenous small interfering RNA (endo-siRNA) pathways in heterochromatin formation in order to silence transposable elements in germline and somatic tissues, respectively, but direct evidence is lacking. We addressed whether the genomic locations generating these small RNAs may act as AGO-dependent platforms for heterochromatin recruitment. Our genetic and biochemical analyses revealed that heterochromatin is nucleated independently of endo-siRNA and piRNA pathways suggesting that RNAi-dependent heterochromatin assembly may not be conserved in metazoans.

Chromatin insulators are regulatory elements characterized by enhancer blocking and barrier activity. Insulators form large nuclear foci termed insulator bodies that are tethered to the nuclear matrix and have been proposed to organize the genome into distinct transcriptional domains by looping out intervening DNA. In Drosophila, RNA silencing has been reported to affect nuclear organization of gypsy insulator complexes and formation of Polycomb repression bodies. Our studies revealed that AGO2 is required for CTCF/CP190-dependent Fab-8 insulator function independent of its catalytic activity or Dicer-2. Moreover, AGO2 associates with euchromatin but not heterochromatin genome-wide. Also, AGO2 associates physically with CP190 and CTCF, and mutation of CTCF, CP190, or AGO2 decreases chromosomal looping interactions and alters gene expression. We propose a novel RNAi-independent role for AGO2 in the nucleus. We postulate that insulator proteins recruit AGO2 to chromatin to promote or stabilize chromosomal interactions crucial for proper gene expression. Overall, our findings demonstrate novel mechanisms by which RNA silencing affects gene expression on the level of higher order chromatin organization.