The white-apricot (wa) allele differs from the wild-type white gene by the presence of the retrovirus-like transposable element copia within the transcription unit. Most RNAs derived from wa have 3' termini within this insertion, and only small amounts of structurally normal RNA are produced. The activity of wa is reduced in trans by a semidominant mutation in the gene Enhancer-of-white-apricot (E(wa). Flies that are wa and heterozygous for the enhancer have eyes which are much lighter than the orange-yellow of wa alone while E(wa) homozygotes have white eyes. This semidominant effect on pigmentation is correlated with a corresponding decrease in white RNA having wild type structure, and flies homozygous for E(wa) have increased levels of aberrant RNAs. Three reverant alleles of E(wa) generated by reversion of the dominant enhancer phenotype with gamma radiation are noncomplementing recessive lethals, with death occurring during the larval stage. The effects on wa eye pigmentation of varying doses of the original E(wa) allele, the wild type allele, and the revertant alleles suggest that the original E(wa) allele produces a product that interferes with the activity of the wild type gene and that the revertants are null alleles. We propose that the E(wa) gene product influences the activity of the downstream copia long terminal repeat in 3' end formation.