We have isolated a dominant mutation, pugilistDominant (pugD), that causes variegated reductions in pteridine and ommochrome pigmentation of the Drosophila eye. The effect of pugD on pteridine pigmentation is most dramatic: the only remaining pigment consists of a thin ring of pigment around the periphery of the eye with a few scattered spots in the center. The pugD mutation disrupts a gene that encodes a Drosophila homolog of the trifunctional enzyme methylenetetrahydrofolate dehydrogenase (MTHFD; E.C.1.5.1.5, E.C.3.5. 4.9, E.C.6.3.4.3). This enzyme produces a cofactor that is utilized in purine biosynthesis. Because pteridines are derived from GTP, the pigment defect may result from an impairment in the production of purines. The mutant allele consists of a portion of the MTHFD coding region fused to approximately 1 kb of highly repetitive DNA. Transcription and translation of both parts are required for the phenotype. The repetitive DNA consists of approximately 140 nearly perfect repeats of the sequence AGAGAGA, a significant component of centric heterochromatin. The unusual nature of the protein produced by this gene may be responsible for its dominance. The repetitive DNA may also account for the variegated aspect of the phenotype. It may promote occasional association of the pugD locus with centric heterochromatin, accompanied by inactivation of pugD, in a manner similar to the proposed mode of action for brownDominant.