Higher order chromosome structure and nuclear architecture can have profound effects on gene regulation. We analyzed how compartmentalizing the genome by tethering heterochromatic regions to the nuclear lamina affects dosage compensation in the nematode C. elegans. In this organism, the dosage compensation complex (DCC) binds both X chromosomes of hermaphrodites to repress transcription two-fold, thus balancing gene expression between XX hermaphrodites and XO males. X chromosome structure is disrupted by mutations in DCC subunits. Using X chromosome paint fluorescence microscopy, we found that X chromosome structure and subnuclear localization are also disrupted when the mechanisms that anchor heterochromatin to the nuclear lamina are defective. Strikingly, the heterochromatic left end of the X chromosome is less affected than the gene-rich middle region, which lacks heterochromatic anchors. These changes in X chromosome structure and subnuclear localization are accompanied by small, but significant levels of derepression of X-linked genes as measured by RNA-seq, without any observable defects in DCC localization and DCC-mediated changes in histone modifications. We propose a model in which heterochromatic tethers on the left arm of the X cooperate with the DCC to compact and peripherally relocate the X chromosomes, contributing to gene repression. Overall design: RNA-seq profiles of C. elegans L1 wild type hermaphrodites, cec-4, met-2 set-25, and DPY-27 RNAi. RNA-seq profiles or C. elegans. Strains are N2 Bristol strain (wild type), RB2301 cec-4(ok3124) IV, and EKM99 met-2(n4256) set-25(n5021) III. Biological replicates for each strain/stage listed separately.