Variegating position effects in Drosophila result from chromosome rearrangements where normal genes, having been placed next to heterochromatin, are inactivated in some cells but not in others, thereby producing a variegated tissue. We have determined that the euchromatic breakpoints for three variegating white mutants are clustered and lie approximately 25 kb downstream of the white structural gene. In each case the white locus is adjoined in the heterochromatin to a mobile genetic element. Satellite sequences are not involved. We also demonstrate that revertants of the variegating mutant, wm4, are reinversions that leave the initial wm4-heterochromatic junction intact so that some heterochromatin-derived sequences remain joined to white at its new location. These results suggest a simple model for understanding the structure of heterochromatic domains and how variegating position effects may arise.