Endogenous gypsy insulators mediate higher order chromatin organization and repress gene expression in Drosophila

Chromatin insulators play a role in gene transcription regulation by defining chromatinboundaries. Genome-wide studies in Drosophila have shown that a large proportion of insulator sites are found in intergenic DNA sequences, supporting a role for these elements as boundaries. However, approximately 40% of insulator sites are also found in intragenic sequences, where they can potentially perform as yet unidentified functions. Here we show that multiple Su(Hw) insulator sites map within the 110 kb sequence of the muscleblind gene (mbl), which also forms a highly condensed chromatin structure in polytene chromosomes. Chromosome Conformation Capture assays indicate that Su(Hw) insulators mediate the organization of higher-order chromatin structures at the mbl locus, resulting in a barrier for the progression of RNA polymeraseII (PolII ), and producing a repressive effect on basal and active transcription. The interference of intragenic insulators in PolII progression suggests a role for insulators in the elongation process. Supporting this interpretation, we found that mutations in su(Hw) and mod(mdg4) also result in changes in the relative abundance of the mblD isoform, by promoting early transcription termination. These results provide experimental evidence for a new role ofintragenic Su(Hw) insulators in higher-order chromatin organization, repression of transcription, and RNA processing