Eukaryotic gene expression is mediated by compact cis-regulatory modules, or enhancers, which are bound by specific sets of transcription factors. The combinatorial interaction of these bound transcription factors determines time- and tissue-specific gene activation or repression. The even-skipped stripe 2 element controls the expression of the second transverse stripe of even-skipped messenger RNA in Drosophila melanogaster embryos, and is one of the best characterized eukaryotic enhancers. Although even-skipped stripe 2 expression is strongly conserved in Drosophila, the stripe 2 element itself has undergone considerable evolutionary change in its binding-site sequences and the spacing between them. We have investigated this apparent contradiction, and here we show that two chimaeric enhancers, constructed by swapping the 5' and 3' halves of the native stripe 2 elements of two species, no longer drive expression of a reporter gene in the wildtype pattern. Sequence differences between species have functional consequences, therefore, but they are masked by other co-evolved differences. On the basis of these results, we present a model for the evolution of eukaryotic regulatory sequences.