Repression and activation of gene transcription involves multiprotein complexes that modify chromatin structure. The integration of these complexes at regulatory sites can be assisted by co-factors that link them to DNA-bound transcriptional regulators. In humans, one such co-factor is the herpes simplex virus host-cell factor 1 (HCF-1), which is implicated in both activation and repression of transcription. We show here that disruption of the gene encoding the Drosophila melanogaster homolog of HCF-1, dHCF, leads to a pleiotropic phenotype involving lethality, sterility, small size, apoptosis, and morphological defects. In Drosophila, repressed and activated transcriptional states of cell fate-determining genes are maintained throughout development by Polycomb Group (PcG) and Trithorax Group (TrxG) genes, respectively. dHCF mutant flies display morphological phenotypes typical of TrxG mutants and dHCF interacts genetically with both PcG and TrxG genes. Thus, dHCF inactivation enhances the mutant phenotypes of the Pc PcG as well as brm and mor TrxG genes, suggesting that dHCF possesses Enhancer of TrxG and PcG (ETP) properties. Additionally, dHCF interacts with the previously established ETP gene skd. These pleiotropic phenotypes are consistent with broad roles for dHCF in both activation and repression of transcription during fly development.