Both mutations of Drosophila melanogaster in the y2scD1 strain are caused by the insertion of gypsy, but the scD1 mutation contains, in addition, an insertion of the jockey mobile element at a distance of 1.8 kb from gypsy. The su(Hw)-binding region in the copy of gypsy in scD1 inhibits scute expression in several specific areas of the epithelium, and in particular, blocks the formation of anterior notopleural (ANP) bristles. The y2 reversions y+2MC and y2#+9 restore the formation of ANP bristles. Molecular analysis revealed that both revertants were induced by transposition into the gypsy element at the yellow locus of jockey and an adjacent 1.8-kb region of the scute gene which contains an enhancer responsible for the development of ANP bristles. The duplicated enhancer is not insulated by the su(Hw)-binding region and can interact with the scute promoter in spite of the presence of two other promoters between them. Hypomorphic mutation in the e(y)2 gene and zOp6 allele partially inhibit ANP bristle formation in flies with y+2MC and y2+9 mutations. In addition, we found that mutations in the e(y)1, e(y)3 and zeste genes may interfere with transcriptional insulation by the su(Hw)-binding region in the scD1 allele.