Variegated position-effect in Drosophila melanogaster was studied using the chromosomal rearrangement Dp (1;f) R, which is a transposition of the euchromatic region 1A3-4-3A1-2 of the X-chromosome to centromeric heterochromatin of the same chromosome. The transposition shows variegation for dor+ and adjacent genes and results in the appearance of non-pigmented cells in the yellow Malpighian tubules of variegated larvae. Variegation is drastically enhanced by the elimination of the Y chromosome and the decrease of rearing temperature. — In the nuclei of salivary glands of individuals with extreme variegation the transposed 1A3-4-3A1-2 region of the polytene X-chromosome has an altered (heterochromatinized) morphology as compared to the homologous interval of the normal X-chromosome. Heterochromatinization consists in the elimination of several bands, the appearance of unusually dense bands, absence of puffs and weakening of the conjugation of chromatids. — Autoradiographic studies with polytene chromosomes after pulse labelling with 3H-thymidine and 3H-uridine reveal that both transcription and replication in the transposed region are altered in larvae showing extreme variegation. The alterations consists in a 40% decrease of RNA synthesis and a delay of replication in the transposed region. Long-term labelling with 3H-thymidine reveals an underreplication of DNA in the transposed euchromatin which is most pronounced in the regions adjacent to heterochromatin. The delay of replication and underreplication of euchromatin resulting from transposition to heterochromatin may be the cause of eventual inactivation of genes in the transposed region.