BACKGROUND: The product of dosage compensation in female mammals is the inactive X chromosome (Xi). Xi facultative heterochromatin is organized into two different types, one of which is defined by histone H3 trimethylated at lysine 9 (H3K9me3). The rationale for this study was to assess SET domain bifurcated 1 (SETDB1) as a candidate for maintaining this repressive modification at the human Xi. RESULTS: Here, we show that loss of SETDB1 does not result in large-scale H3K9me3 changes at the Xi, but unexpectedly we observed striking decompaction of the Xi territory. Close examination revealed a 0.5 Mb region of the Xi that transitioned from H3K9me3 heterochromatin to euchromatin within the 3' end of the IL1RAPL1 gene that is part of a common chromosome fragile site that is frequently deleted or rearranged in patients afflicted with intellectual disability and other neurological ailments. Centrally located within this interval is a powerful enhancer adjacent to an ERVL-MaLR element. In the absence of SETDB1, the enhancer is reactivated on the Xi coupled with bidirectional transcription from the ERVL-MaLR element. Xa deletion of the enhancer/ERVL-MaLR resulted in loss of full-length IL1RAPL1 transcript in cis, coupled with trans decompaction of the Xi chromosome territory, whereas Xi deletion increased detection of full-length IL1RAPL1 transcript in trans, but did not impact Xi compaction. CONCLUSIONS: These data support a critical role for SETDB1 in maintaining the ERVL-MaLR element and adjacent enhancer in the 3' end of the IL1RAPL1 gene in a silent state to facilitate Xi compaction.