Recent studies by various authors suggest that variation in gene regulation may be common in nature, and might be of great evolutionary consequence; but the ascertainment of variation in gene regulation has proven to be a difficult problem. In this study, we explore this problem by measuring alcohol dehydrogenase (ADH) activity in Drosophila melanogaster strains homozygous for various combinations of given second and third chromosomes sampled from a natural population. The structural locus (Adh) coding for ADH is on the second chromosome. The results show that: (1) there are genes, other than Adh, that affect the levels of ADH activity; (2) at least some of these "regulatory" genes are located on the third chromosome, and thus are not adjacent to the Adh locus; (3) variation exists in natural populations for such regulatory genes; (4) the effect of these regulatory genes varies as they interact with different second chromosomes; (5) third chromosomes with high-activity genes are either partially or completely dominant over chromosomes with low-activity genes; (6) the effects of the regulatory genes are pervasive throughout development; and (7) the third chromosome genes regulate the levels of ADH activity by affecting the number of ADH molecules in the flies. The results are consistent with the view that the evolution of regulatory genes may play an important role in adaptation.