The suppressor of Hairy wing (su(Hw)) protein inhibits the function of transcriptional enhancers located distally from the promoter with respect to the location of su(Hw)-binding sites. This polarity is due to the ability of the su(Hw)-binding region to form a chromatin insulator. Mutations in modifier of mdg4 (mod(mdg4)) enhance the effect of su(Hw) by inhibiting the function of enhancers located on both sides of the su(Hw)-binding region. This inhibition results in a variegated expression pattern, and mutations in mod(mdg4) act as classical enhancers of position-effect variegation. The mod(mdg4) and su(Hw) proteins interact with each other. The mod(mdg4) protein controls the nature of the repressive effect of su(Hw): in the absence of mod(mdg4) protein, su(Hw) exerts a bidirectional silencing effect, whereas in the presence of mod(mdg4), the silencing effect is transformed into unidirectional repression.