Several techniques have been developed to manipulate gene expression temporally in intact neural circuits. However, the applicability of current tools developed for in vivo studies in Drosophila is limited by their incompatibility with existing GAL4 lines and side effects on physiology and behavior. To circumvent these limitations, we adopted a strategy to reversibly regulate protein degradation with a small molecule by using a destabilizing domain (DD). We show that this system is effective across different tissues and developmental stages. We further show that this system can be used to control in vivo gene expression levels with low background, large dynamic range, and in a reversible manner without detectable side effects on the lifespan or behavior of the animal. Additionally, we engineered tools for chemically controlling gene expression (GAL80-DD) and recombination (FLP-DD). We demonstrate the applicability of this technology in manipulating neuronal activity and for high-efficiency sparse labeling of neuronal populations.