The Drosophila modifier of variegation modulo gene product binds specific RNA sequences at the nucleolus and interacts with DNA and chromatin in a phosphorylation-dependent manner

modulo belongs to the modifier of Position Effect Variegation class of Dros ophila genes, suggesting a role for its product in regulating chromatin str ucture. Genetics assigned a second function to the gene, in protein synthes is capacity. Bifunctionality is consistent with protein localization in two distinct subnuclear compartments, chromatin and nucleolus, and with its or ganization in modules potentially involved in DNA and RNA binding. In this study, we examine nucleic acid interactions established by Module at nucleo lus and chromatin and the mechanism that controls the distribution and bala nces the function of the protein in the two compartments. Structure/functio n analysis and oligomer selection/amplification experiments indicate that, in vitro, two basic terminal domains independently contact DNA without sequ ence specificity, whereas a central RNA Recognition Motif (RRM)-containing domain allows recognition of a novel sequence-/motif-specific RNA class. Ph osphorylation moreover is shown to down-regulate DNA binding, Evidence is p rovided that in vivo nucleolar Module is highly phosphorylated and belongs to a ribonucleoprotein particle, whereas chromatin-associated protein is no t modified. A functional scheme is finally proposed in which modification b y phosphorylation modulates Mod subnuclear distribution and balances its fu nction at the nucleolus and chromatin.