We report here the isolation of a new P-element-induced allele of the vestigial locus vg(2a33), the molecular characterization of which allows us to propose a unifying explanation of the phenotypes of the large number of vestigial P-element alleles that now exists. The first P-element allele of vestigial to be isolated was vg(21), which results in a very weak mutant wing phenotype that is suppressed in the P cytotype. By destabilizing vg(2a33) in a dysgenic cross, we isolated the vg(2a33) allele, which exhibits a moderate mutant wing phenotype and is not suppressed by the P cytotype. The new allele is characterized by a 46-bp deletion that removes the 3'-proximal copy of the 11-bp internal repeat from the P element of vg(21). To understand how this subtle difference between the two alleles leads to a rather pronounced difference in their phenotypes, we mapped both the vg and P-element transcription units present in wild type and mutants. Using both 5'-RACE and S1 protection, we found that P-element transcription is initiated 19 bp farther upstream than previously thought. Using primer extension, the start of vg transcription was determined to lie 435 bp upstream of the longest cDNA recovered to date and upstream of the P-element insertion site. Our discovery that the P element is situated within the first vg exon has prompted a reassessment of the large body of genetic data on a series of alleles derived from vg(21). Our current hypothesis to explain the degree of variation in the mutant phenotypes and their response to the P repressor invokes a critical RNA secondary structure in the vg transcript, the formation of which is hindered by a readthrough transcript initiated at the P-element promoter.