SummaryIn eukaryotes, distinct regions of the genome are packaged as euchromatin (less condensed, more active) or heterochromatin (condensed, silenced). Studies in yeast, plants, and flies suggest that RNA interference (RNAi) is linked to heterochromatin formation and transcriptional silencing of transposable element (TE) sequences [1, 2]. We previously reported that insertion of a mobile hsp70-white reporter within 10 kb of a 1360 element on chromosome four of Drosophila melanogaster correlates with variegation (silencing) [3]. Here, we report small RNAs (∼23 nt) corresponding to 1360, indicating processing by the RNAi machinery. To directly test the ability of 1360 to silence a nearby gene in vivo, we introduced a P element construct carr...