Insulators are DNA sequences thought to be important for the establishment and maintenance of cell-type specific nuclear architecture. In Drosophila there are several classes of insulators that appear to have unique roles in gene expression. The mechanisms involved in determining and regulating the specific roles of these insulator classes are not understood. Here we report that DNA Topoisomerase II modulates the activity of the Su(Hw) insulator. Downregulation of Topo II by RNAi or mutations in the Top2 gene result in disruption of Su(Hw) insulator function. This effect is mediated by the Mod(mdg4)2.2 protein, which is a unique component of the Su(Hw) insulator complex. Co-immunoprecipitation and yeast two-hybrid experiments show that Topo II and Mod(mdg4)2.2 proteins directly interact. In addition, mutations in Top2 cause a slight decrease of Mod(mdg4)2.2 transcript but have a dramatic effect on Mod(mdg4)2.2 protein levels. In the presence of proteasome inhibitors, normal levels of Mod(mdg4)2.2 protein and its binding to polytene chromosomes are restored. Thus, Topo II is required to prevent Mod(mdg4)2.2 degradation and, consequently, to stabilize Su(Hw) insulator-mediated chromatin organization.