Positive and negative selection on indel variation may explain the correlation between intron length and recombination levels in natural populations of Drosophila. A nucleotide sequence analysis of the 3.5 kilobase sequence of the alcohol dehydrogenase (Adh) region from 139 Drosophila pseudoobscura strains and one D. miranda strain was used to determine whether positive or negative selection acts on indel variation in a gene that experiences high levels of recombination. A total of 30 deletion and 36 insertion polymorphisms were segregating within D. pseudoobscura populations and no indels were fixed between D. pseudoobscura and its two sibling species D. miranda and D. persimilis. The ratio of Tajima's D to its theoretical minimum value (D(min)) was proposed as a metric to assess the heterogeneity in D among D. pseudoobscura loci when the number of segregating sites differs among loci. The magnitude of the D/D(min) ratio was found to increase as the rate of population expansion increases, allowing one to assess which loci have an excess of rare variants due to population expansion versus purifying selection. D. pseudoobscura populations appear to have had modest increases in size accounting for some of the observed excess of rare variants. The D/D(min) ratio rejected a neutral model for deletion polymorphisms. Linkage disequilibrium among pairs of indels was greater than between pairs of segregating nucleotides. These results suggest that purifying selection removes deletion variation from intron sequences, but not insertion polymorphisms. Genome rearrangement and size-dependent intron evolution are proposed as mechanisms that limit runaway intron expansion.