We have purified two proteins from Drosophila that bind to the scs' boundary element of the hsp70 domain at locus 87A7. Their palindromic binding sites (CGATA-TATCG) symmetrically abut the previously mapped hypersensitive site of scs'. We have cloned a cDNA for one of these proteins, BEAF-32 (boundary element-associated factor of 32 kDa). It encodes a novel protein that is bound to scs' but not scs in vivo. Immunostaining localizes BEAF to hundreds of interbands and many puff boundaries on polytene chromosomes, suggesting that a chromosomal domain consists of a band (or puff) and part of the flanking interbands. Enhancer blocking assays implicate the palindromic binding site in boundary function. The lack of enhancer blocking in transiently transfected cells suggests an involvement of chromatin, nuclear structure, or both in boundary function.