Position-effect variegation was studied in Drosophila melanogaster using a rearrangement that places the 87C heat shock puff locus next to heterochromatin. After heat shock, the translocated 87C region failed to puff or to accumulate RNA in some nuclei, but puffed normally in other nuclei from the same individual. In situ hybridization experiments showed that the level of polyteny was not greatly affected at the inactive gene site. Therefore, the variable ability of a gene to be transcriptionally induced, rather than its dosage, is the basis of the position effect phenomenon. These experiments also showed that heat shock gene sequences are single-stranded in puffs under relatively gentle specimen preparation conditions, in contrast to the same sequences in unpuffed sites.