DPY-30 is an essential component of the C. elegans dosage compensation machinery that reduces X chromosome transcript levels in hermaphrodites (XX). DPY-30 is required for the sex-specific association of DPY-27 (a chromosome condensation protein homolog) with the hermaphrodite X chromosomes. Loss of dpy-30 activity results in XX-specific lethality. We demonstrate that dpy-30 encodes a novel nuclear protein of 123 amino acids that is present in both hermaphrodites and males (XO) throughout development. DPY-30 itself is not associated with the X chromosomes, nor is its pattern of expression perturbed by mutations in the gene hierarchy that controls dosage compensation. Therefore, DPY-30 is a ubiquitous factor that is likely to promote the hermaphrodite-specific association of DPY-27 with X by affecting the activity of a sex-specific dosage compensation gene. In XO animals, DPY-30 is required for developmental processes other than dosage compensation: coordinated movement, normal body size, correct tail morphology and mating behavior. We demonstrate that rescue of both the XX-specific lethality and the XO-specific morphological defects caused by dpy-30 mutations can be achieved by inducing dpy-30 transcripts either in the mother or in the embryo through the end of gastrulation. dpy-30 appears to be cotranscribed in an operon with a novel RNA-binding protein.