Drosophila adults carrying a dominant allele of the Deformed locus (DfdD) have a mutant phenotype in which lower eye and orbital structures of the adult head are eliminated. The molecular defect responsible for this dominant mutation is a large, transposon-flanked, fragment of DNA inserted downstream of the Deformed (Dfd) transcription unit. The downstream transposon-flanked insert causes the inappropriate activation of Dfd gene expression in a subset of the cells of the eye imaginal disc, resulting in their abnormal development, and in the loss of lower eye structures from the adult head. A chromosome selected for its reversion of the dominant phenotype is missing a portion of the transposon-flanked insert and reverts to a normal expression pattern of Dfd in the eye-antennal disc. Additional evidence that the dominant head phenotype is caused by ectopic expression of Dfd in the eye disc derives from experiments showing that a DfdD-like phenotype can be induced by ectopic expression of a Dfd gene under heat shock promoter control.