We used the white gene as an enhancer trap and reporter of chromatin structure. We collected white+ transgene insertions presenting a peculiar pigmentation pattern in the eye: white expression is restricted to the dorsal half of the eye, with a clear-cut dorsal/ventral (D/V) border. This D/V pattern is stable and heritable, indicating that phenotypic expression of the white reporter reflects positional information in the developing eye. Localization of these transgenes led us to identify a unique genomic region encompassing 140 kb in 69D1-3 subject to this D/V effect. This region contains at least three closely related homeobox-containing genes that are constituents of the iroquois complex (IRO-C). IRO-C genes are coordinately regulated and implicated in similar developmental processes. Expression of these genes in the eye is regulated by the products of the Polycomb-group (Pc-G) and trithorax-group (trx-G) genes but is not modified by classical modifiers of position-effect variegation. Our results, together with the report of a Pc-G binding site in 69D, suggest that we have identified a novel cluster of target genes for the Pc-G and trx-G products. We thus propose that ventral silencing of the whole IRO-C in the eye occurs at the level of chromatin structure in a manner similar to that of the homeotic gene complexes, perhaps by local compaction of the region into a heterochromatin-like structure involving the Pc-G products.