We have isolated DNA sequences defining the forked locus of Drosophila. All the alleles belonging to the right pseudoallelic series of M. M. Green map within a 5.4 kb DNA fragment that encodes four transcripts. These RNAs are only expressed in 2-4 day old pupae and their accumulation is affected by mutations at the forked locus. Also, homozygous mutations at the unlinked suppressor loci su(Hw) and su(f) cause the accumulation of these RNAs to return to the normal wild-type levels. The gypsy transposable element, which causes the mutant phenotype in the suppressible forked alleles, encodes a transcript that is maximally expressed in 2-3 day old pupae, the same time in development as transcription of the forked RNAs. We propose a model to explain the mutagenic effect of gypsy based on the influence of promoter elements in the long terminal repeats of the transposon on the transcription from other promoters located nearby.