When the gypsy retrotransposon of Drosophila inserts between an enhancer and promoter it prevents the enhancer from activating transcription. Enhancers are blocked because the protein (SUHW) encoded by the suppressor of Hairy-wing [su(Hw)] gene binds to gypsy. For example, gypsy insertions in an 85 kilobase region between a wing margin-specific enhancer and the promoter in the cut gene cause a cut wing phenotype that is suppressed by su(Hw) mutations. A temperature-sensitive combination of mutant su(Hw) alleles was used to investigate the mechanism by which SUHW blocks the cut wing margin enhancer. By shifting from the nonpermissive to the permissive temperature and vice versa at various stages in development it was found that active SUHW is only required around pupariation when the wing margin enhancer is active to cause a cut wing phenotype. This was true whether gypsy was in the embryonic control region near the promoter, or in the late larval control region near the wing margin enhancer. These results indicate that SUHW must be active only when an enhancer is active to block the enhancer. Furthermore, the observations also indicate that enhancer-blocking by SUHW is reversible and that it occurs soon after binding of active SUHW to gypsy DNA. These results are consistent with models in which SUHW structurally interferes with enhancer-promoter interactions.