Linker histones H1 are principal chromatin components, whose contribution to the epigenetic regulation of chromatin structure and function is not fully understood. In metazoa, specific linker histones are expressed in the germline, with female-specific H1s being normally retained in the early-embryo. Embryonic H1s are present while the zygotic genome is transcriptionally silent and they are replaced by somatic variants upon activation, suggesting a contribution to transcriptional silencing. Here we directly address this question by ectopically expressing dBigH1 in Drosophila S2 cells, which lack dBigH1. We show that dBigH1 binds across chromatin, replaces somatic dH1 and reduces nucleosome repeat length (NRL). Concomitantly, dBigH1 expression down-regulates gene expression by impairing RNApol II binding and histone acetylation. These effects depend on the acidic N-terminal ED-domain of dBigH1 since a truncated form lacking this domain binds across chromatin and replaces dH1 like full-length dBigH1, but it does not affect NRL either transcription. In vitro reconstitution experiments using Drosophila preblastodermic embryo extracts corroborate these results. Altogether these results suggest that the negatively charged N-terminal tail of dBigH1 alters the functional state of active chromatin compromising transcription.