The y2 mutation resulted from the insertion of the gypsy element into the X‐linked yellow locus of Drosophila melanogaster. As a consequence of this insertion, transcriptional enhancers that control the expression of the yellow gene in the wings and body cuticle of adult flies are unable to act on the yellow promoter, resulting in a tissue‐specific phenotype characterized by mutant coloration in these structures. Some yellow null alleles (yn) are able to complement the y2 phenotype giving rise to near wild type y2/yn females. The molecular structure of the yellow locus in complementing and noncomplementing mutations was determined by cloning and sequencing the various alleles examined. From the information obtained in these studies, we propose a model suggesting that the complementing wild type phenotype of y2/yn flies might be due to the ability of functional wing and body cuticle transcriptional enhancers located in the yn locus to act in trans on the promoter of the yellow gene found in the y2‐containing chromosome. Furthermore, this transactivation is abolished by the presence of an intact promoter in cis, suggesting that promoter competition between the yellow genes located on each homolog precludes the activation in trans by transcriptional enhancers in favour of cis effects on their own promoter.