Development of multicellular organisms is achieved by organized temporal and spatial patterns of gene expression leading to cell differentiation. Chromatin regulators control how the DNA is utilized by altering access of proteins to DNA and thereby function as co-factors in transcription. Gene regulation also involves co-factors interacting with transcription factors at regulatory sequences of DNA. In this thesis, we have studied the in vivo role of three co-factors, CBP, dKDM4A and Brakeless, in regulating chromatin and transcription using Drosophila melanogaster. The CREB binding protein (CBP) belongs to histone acetyl transferases (HATs) and facilitates gene activation by many transcription factors. Our work has demonstrated that CBP occupies the genome preferentially together with Rel and Smad proteins controlling dorsal-ventral patterning in the Drosophila embryo. CBP occupancy generally correlates with gene expression but also occurs at silent genes without resulting in histone acetylation. KDM4A belongs to a family of JmjC domain proteins and demethylates H3K36me3, a histone modification enriched in the 3’end of active genes. We generated dKDM4A mutants with a global elevation of H3K36me3 levels and identify mis-regulated genes in first instar larvae. The data indicate that dKDM4A regulates some genes by mechanisms that do not involve H3K36 methylation. Further, over-expression of dKDM4A result in male lethality and globally reduced H3K36me3 levels, indicating impaired dosage compensation of the X-chromosome. Brakeless is a conserved co-factor participating in several important processes during development. We generated mutant brakeless embryos and identify direct genomic targets of Brakeless. To our surprise, Brakeless behaves as a direct activator for some genes but repressor in other cases. We also identify an interaction of Brakeless with the Mediator subunit Med19. In summary, these studies reveal unexpected roles for co-regulators in Drosophila development. The HAT CBP can bind silent genes without leading to histone acetylation. Brakeless has the ability to function both as a direct activator and repressor of transcription.