Chromatin structure is a fundamental determinant of eukaryotic gene expression and it is composed of two chromatin environments, euchromatin and heterochromatin. Euchromatin provides an accessible platform for transcription factors; hence it is permissive for gene expression. Heterochromatin on the other hand is highly compacted and inaccessible, which in most cases leads to transcriptional repression. A locus that is composed of both of these environments is the ribosomal DNA (rDNA). In eukaryotes the rDNA is composed of hundreds to thousands of tandemly repeated genes where maintaining both silent and active copies is fundamental for the stability of the genome. The aim of this research was to investigate the role of the rDNA in gene expression in Drosophila melanogaster. In D. melanogaster the rDNA loci are present on the X and Y chromosomes. This research used the Y-linked rDNA array to investigate the role of this locus on gene expression. A genetic and molecular strategy was designed to create and quantify specific, graded and isogenic Y- linked rDNA deletions. Then the deletions were used to address the effect of rDNA deletions on gene expression using reporter genes sensitive to Position Effect Variegation (PEV). In addition, the effect of the deletions in nucleolus size and structure as well as the effect of spontaneous rDNA deletions on gene expression were tested in this study. This research found that changes in rDNA size change the chromatin balance, which resulted in increased expression of the reporter genes, decreased nucleolus volume, and altered nucleolus structure. These findings prompted a further research question on whether this effect on gene expression occured globally in the genome. This was addressed by performing microarray analysis where the results showed that rDNA deletions affect about half of the genes on the genome. Presented in this dissertation is evidence that suggest a novel role for the rDNA is a global modulator of gene expression and also is a contributor to the gene expression variance observed in natural populations.