Eukaryotic DNA replicates asynchronously, with discrete genomic loci replicating during different stages of S phase. Drosophila larval tissues undergo endoreplication without cell division, and the latest replicating regions occasionally fail to complete endoreplication, resulting in underreplicated domains of polytene chromosomes. Here we show that linker histone H1 is required for the underreplication (UR) phenomenon in Drosophila salivary glands. H1 directly interacts with the Suppressor of UR (SUUR) protein and is required for SUUR binding to chromatin in vivo. These observations implicate H1 as a critical factor in the formation of underreplicated regions and an upstream effector of SUUR. We also demonstrate that the localization of H1 in chromatin changes profoundly during the endocycle. At the onset of endocycle S (endo-S) phase, H1 is heavily and specifically loaded into late replicating genomic regions and is then redistributed during the course of endoreplication. Our data suggest that cell cycle-dependent chromosome occupancy of H1 is governed by several independent processes. In addition to the ubiquitous replication-related disassembly and reassembly of chromatin, H1 is deposited into chromatin through a novel pathway that is replication-independent, rapid, and locus-specific. This cell cycle-directed dynamic localization of H1 in chromatin may play an important role in the regulation of DNA replication timing.