We have constructed a new reporter transgene, Winkelried, equipped with a synthetic binding site for the yeast GAL4 transcriptional activator. The binding site is inserted between the white and lacZ reporter genes, and is flanked by FRT sequences. These elements allow excision of the GAL4 binding site by crossing the transgenic line with an FLP recombinase producing strain. We have generated by X-ray irradiation two independent chromosomal rearrangements, Heidi and Tell, relocating Winkelried next to pericentromeric heterochromatin. These rearrangements induce variegation of both white and lacZ. Variegation of Winkelried in the rearranged transgenic lines responds to the loss and excess of doses of the dominant suppressors of position-effect variegation (PEV) Su(var)3-7 and Su(var)2-5. Winkelried therefore constitutes a unique tool to test the effect on variegation in cis of any factor fused to the GAL4 DNA binding domain. Indeed, a chimeric protein, made of the DNA binding site of GAL4 and of HP1, the modifier of PEV encoded by Su(var)2-5, is shown to enhance variegation of Heidi and Tell. Excision of the binding sites for GAL4 in the variegating rearrangements Heidi and Tell abolishes the modifier effect of the GAL4-HP1 chimera. Therefore, in the Heidi and Tell rearrangements, enhancement of position-effect variegation depends strictly both on the concentration of GAL4-HP1 and on the presence of its binding site in the vicinity of the reporter genes.