The mechanisms that allow enhancers to activate promoters from thousands of base pairs away are disrupted by the suppressor of Hairy-wing protein (SUHW) of Drosophila. SUHW binds a DNA sequence in the gypsy retrotransposon and prevents enhancers promoter-distal to a gypsy insertion in a gene from activating without affecting promoter-proximal enhancers. Several observations indicate that SUHW does not affect enhancer-binding activators. Instead, SUHW may interfere with factors that structurally facilitate interactions between an enhancer and promoter. To identify putative enhancer facilitators, a screen for mutations that reduce activity of the remote wing margin enhancer in the cut gene was performed. Mutations in scalloped, mastermind, and a previously unknown gene, Chip, were isolated. A TEA DNA-binding domain in the Scalloped protein binds the wing margin enhancer. Interactions between scalloped, mastermind and Chip mutations indicate that mastermind and Chip act synergistically with scalloped to regulate the wing margin enhancer. Chip is essential and also affects expression of a gypsy insertion in Ultrabithorax. Relative to mutations in scalloped or mastermind, a Chip mutation hypersensitizes the wing margin enhancer in cut to gypsy insertions. Therefore, Chip might encode a target of SUHW enhancer-blocking activity.