Insulator DNAs, or boundary elements, functionally isolate neighbouring genes by blocking interactions between distal enhancers and inappropriate target promoters. The best-characterized insulators in Drosophila correspond to a 340-base-pair (bp) fragment from the gypsy retrotransposon, and the scs and scs' sequences flanking the 87A1 hsp70 locus. Here we demonstrate that both insulators block the interaction of defined even-skipped (eve) stripe enhancers when positioned between the enhancer and the target promoter. The simultaneous use of two stripe enhancers (eve stripes 2 and 3) provides evidence that enhancers lying distal to the insulator are selectively blocked. The insertion of stripe-insulator-stripe sequences between two divergently transcribed promoters indicates that enhancers barred from acting on one basal promoter are fully accessible to appropriate regulatory factors for activating the other promoter. These results suggest that insulators do not propagate changes in chromatin structure. Finally, we present evidence that the gypsy insulator does not block interactions between a silencer element and a basal promoter. Taken together, these results suggest that insulators might not be restricted to the functional isolation of neighbouring genetic loci. Rather, they might function as flexible regulatory elements that modulate enhancer-promoter interactions within complex promoters and complex genetic loci.