In Drosophila, position effect variegation results when a euchromatic gene has been placed adjacent to a block of centromeric heterochromatin. In this context the euchromatic genes adjoining the heterochromatin are repressed in some cells, but not in others, thereby giving rise to a tissue or organ composed of patches of mutant and wild type cells. The most reasonable explanation for the inactivation seen in variegating rearrangements, is that the usual compacted structure of heterochromatin is propagated past the breakpoint into the neighboring euchromatic sequences, thereby repressing their function. We have shown that, in Drosophila, there are perhaps 20-30 dosage sensitive loci capable of dominantly modifying variegation. These are known as Enhancers and Suppressors of Variegation (E(var)and Su(var)) and may be divided into two classes (I and II). Class I genes behave as Enhancers when duplicated and as Suppressors when mutant or deficient. Such Loci are the majority type and probably code for structural polypeptides that composed heterochromatin. On the other hand, class II genes function as E(var) when deficient and as Su(var) when duplicated. Only two class II genes are known so far. The fact that the reduction or removal of a class II gene product may increase the spread of a heterochromatic domain implies that the wild type function of such loci negatively regulate the propagation of heterochromatin. This suggests that the class II genes play a pivotal role in the assembly of heterochromatin. In order to obtain a deeper understanding of position of effect variegation, we propose to clone by recombinant DNA techniques the class II gene E26A, and to understand how it participates in the assembly of heterochromatic domains. The results from this study should provide greater insight into the structure and function of eukaryotic chromosomes.