Heterochromatin assembly and its associated phenotype, position effect variegation (PEV), provide an informative system to study chromatin structure and genome packaging. In the fruit fly Drosophila melanogaster, the Y chromosome is entirely heterochromatic in all cell types except the male germline; as such, Y chromosome dosage is a potent modifier of PEV. However, neither Y heterochromatin composition, nor its assembly, has been carefully studied. Here, we report the mapping and characterization of eight reporter lines that show male-specific PEV. In all eight cases, the reporter insertion sites lie in the telomeric transposon array (HeT-A and TART-B2 homologous repeats) of the Y chromosome short arm (Ys). Investigations of the impact on the PEV phenotype of mutations in known heterochromatin proteins (i.e., modifiers of PEV) show that this Ys telomeric region is a unique heterochromatin domain: it displays sensitivity to mutations in HP1a, EGG and SU(VAR)3-9, but no sensitivity to Su(z)2 mutations. It appears that the endo-siRNA pathway plays a major targeting role for this domain. Interestingly, an ectopic copy of 1360 is sufficient to induce a piRNA targeting mechanism to further enhance silencing of a reporter cytologically localized to the Ys telomere. These results demonstrate the diversity of heterochromatin domains, and the corresponding variation in potential targeting mechanisms.