Repetitive elements such as transposons can be a source of regulatory sequences and could act to distribute regulatory elements throughout the genome. However, for the repetitive elements organized in tandem, known as satellite DNAs, role in gene regulation is not described till now. In the red flour beetle Tribolium castaneum (Coleoptera) satellite DNAs play an important role in heterochromatin regulation and remodelling during development and environmental stress response. Expression of a major satellite DNA is strongly induced by heat shock, and increased level of satellite-derived small interfering RNAs (siRNAs) is accompanied by increase of repressive epigenetic modifications of histones at heterochromatin. In addition to their presence in the heterochromatin, short stretches of satellite DNA have been mapped in the close vicinity of numerous genes within euchromatin. The environmentally susceptible transcription of a major satellite DNA as well as its distribution close to protein-coding genes provides strong support for the role of satellite DNA in gene regulation and adaptation to different environmental conditions. The aim of the proposed project is to investigate the gene-regulatory role of satellite DNAs in insect T. castaneum. We propose that satellite DNA-associated siRNAs could affect epigenetic state of euchromatic regions containing dispersed satellite elements by targeting these elements in a sequence-specific manner and by guiding chromatin modifiers, primarily histone methyltransferase. This could result in heterochromatin assembly at dispersed satellite DNA elements and its spreading to the flanking region. Such “heterochromatization” is expected to influence the expression of nearby genes, most probably by decreasing the level of gene expression. We expect that our results will for the first time demonstrate a role of satellite DNAs in the modulation of protein-gene expression and in environmental adaptation.