Cosuppression refers to the phenomenon in which silencing among dispersed homologous genes occurs. Here we demonstrate that two nonhomologous reciprocal fusion genes, white-Alcohol dehydrogenase (w-Adh) and Adh-w, exhibit cosuppression using the endogenous Adh sequence as an intermediary. Deletion of the endogenous Adh gene eliminates the interaction, while reintroduction of an 8.6 kb Adh fragment restores the silencing. Using truncated Adh constructs, a nontranscribed segment in the Adh regulatory region was found to be one of the sequences required for homology recognition. The silencing interaction is initiated during early development. The silenced transgenes are associated with the Polycomb group complex of chromatin proteins.