Heterochromatic regions of the genome are repeat-rich and poor in protein coding genes, and are therefore underrepresented in even the best genome assemblies. One of the most difficult regions of the genome to assemble are sex-limited chromosomes. The Drosophila melanogaster Y chromosome is entirely heterochromatic, yet has wide-ranging effects on male fertility, fitness, and genome-wide gene expression. The genetic basis of this phenotypic variation is difficult to study, in part because we do not know the detailed organization of the Y chromosome. To study Y chromosome organization in D. melanogaster, we develop an assembly strategy involving the in silico enrichment of heterochromatic long single-molecule reads and use these reads to create targeted de novo assemblies of heterochromatic sequences. We assigned contigs to the Y chromosome using Illumina reads to identify male-specific sequences. Our pipeline extends the D. melanogaster reference genome by 11.9 Mb, closes 43.8% of the gaps, and improves overall contiguity. The addition of 10.6 MB of Y-linked sequence permitted us to study the organization of repeats and genes along the Y chromosome. We detected a high rate of duplication to the pericentric regions of the Y chromosome from other regions in the genome. Most of these duplicated genes exist in multiple copies. We detail the evolutionary history of one sex-linked gene family—crystal-Stellate. While the Y chromosome does not undergo crossing over, we observed high gene conversion rates within and between members of the crystal-Stellate gene family, Su(Ste), and PCKR, compared to genome-wide estimates. Our results suggest that gene conversion and gene duplication play an important role in the evolution of Y-linked genes.