Among organisms with chromosome-based mechanisms of sex determination, failure to equalize expression of X-linked genes between the sexes is typically lethal. In C. elegans, XX hermaphrodites halve transcription from each X chromosome to match the output of XO males. Here, we mapped the binding location of the condensin homolog DPY-27 and the zinc finger protein SDC-3, two components of the C. elegans dosage compensation complex (DCC). We observed strong foci of DCC binding on X, surrounded by broader regions of localization. Binding foci, but not adjacent regions of localization, were distinguished by clusters of a 10-bp DNA motif, suggesting a recruitment-and-spreading mechanism for X recognition. The DCC was preferentially bound upstream of genes, suggesting modulation of transcriptional initiation and polymerase-coupled spreading. Stronger DCC binding upstream of genes with high transcriptional activity indicated a mechanism for tuning DCC activity at specific loci. These data aid in understanding how proteins involved in higher-order chromosome dynamics can regulate transcription at individual loci.