The genes of the Polycomb-group (Pc-G) are responsible for maintaining the inactive expression state of homeotic genes. They act through specific cis-regulatory DNA elements termed PREs (Pc-G Response Elements). Multimeric complexes containing the Pc-G proteins are thought to induce heterochromatin-like structures, which stably and heritably inactivate transcription. We have tested the functional role of the FAB fragment, a PRE of the bithorax complex. We find that this element behaves as an orientation dependent silencer, capable of inducing mosaic gene expression on neighboring genes. Transgenic fly lines were constructed containing a PRE adjacent to a reporter gene inducible by the yeast GAL4 trans-activator. The competition between the activator and Pc-G-containing chromatin was visualized on polytene chromosomes using immunocytochemistry. The Pc-G protein Polycomb and GAL4 have mutually exclusive binding patterns, supporting the notion that Pc-G-induced chromatin structures can prevent activators from binding to their target sequences. However, this antagonistic function can be overcome by high doses of GAL4, even in the absence of DNA replication.