One goal of the Section on Drosophila Gene Regulation is to understand the regulation of homeotic gene function in Drosophila. The homeotic genes encode homeodomain-containing transcription factors that control cell fates by regulating the transcription of downstream target genes. The homeotic genes are expressed in precise spatial patterns that are crucial for the proper determination of segmental identities. Cis-acting transcriptional regulatory elements from the homeotic genes have been previously-identified by assays in transgenes in Drosophila. These assays have identified both tissue-specific enhancer elements, as well as cis-regulatory elements that are required for the maintenance of activation or repression throughout development. While these transgene assays have been important in defining the structure of the cis-regulatory elements and identifying trans-acting factors that bind them, their functions within the contexts of the endogenous genes is still not well understood. Using a transgene assay, we have identified five candidate fragments of DNA from the Sex combs reduced gene that cause transcriptional silencing of a reporter gene. These cis-regulatory silencing elements require the trans-acting proteins encoded by the Polycomb group genes. Genetic studies first identified the Polycomb group genes by their defects in transcriptional silencing of the homeotic genes. To identify new Polycomb group genes, we have developed a transgene assay using the cis-regulatory silencing elements from the Sex combs reduced homeotic gene. Recessive mutations that disrupt transgene silencing are recovered in mitotic clones in heterozygous flies. We have isolated mutations in most of the known Polycomb group genes on the second chromosome. We have also isolated mutations in several new Polycomb group genes. To understand the downstream regulatory role of the homeotic genes, we have characterized a cis-regulatory element within a homeotic target gene. This element is required for proper expression of one of the Drosophila TGF-beta homologs in the cells that form the adult head structures.