In female mammals, one of the two X chromosomes is silenced for dosage compensation between the sexes. X-chromosome inactivation is initiated in early embryogenesis by the Xist RNA that localizes to the inactive X chromosome. During development, the inactive X chromosome is further modified, a specialized form of facultative heterochromatin is formed and gene repression becomes stable and independent of Xist in somatic cells. The recent identification of several factors involved in this process has provided insights into the mechanism of Xist localization and gene silencing. The emerging picture is complex and suggests that chromosome-wide silencing can be partitioned into several steps, the molecular components of which are starting to be defined.