Naturally occurring transposable element (TE) insertions that disrupt Drosophila promoters are correlated with modified promoter function and are posited to play a significant role in regulatory evolution, but their phenotypes have not been established directly. To establish the functional consequences of these TE insertions, we created constructs with either TE-bearing or TE-lacking hsp70 promoters fused to a luciferase reporter gene and assayed luciferase luminescence in transiently transfected Drosophila cells. Each of the four TEs reduces luciferase signal after heat shock and heat inducibility of the hsp70 promoter. To test if the differences in hsp70 promoter activity are TE-sequence dependent, we replaced each of the TEs with multiple intergenic sequences of equal length. These replacement insertions similarly reduced luciferase signal, suggesting that the TEs affect hsp70 promoter function by altering promoter architecture. These results are consistent with differences in Hsp70 expression levels, inducible thermotolerance, and fecundity previously associated with the TEs. That two different varieties of TEs in two different hsp70 genes have common effects suggests that TE insertion represents a general mechanism through which selection manipulates hsp70 gene expression.