The Su(var)3-7 gene, a haplo-suppressor and triplo-enhancer of position-effect variegation (PEV), encodes a zinc finger heterochromatin-associated protein. To understand the role of this protein in heterochromatin and genomic silencing, mutations were generated by homologous recombination. The donor fragment contained a yellow(+) gene and 7.6 kb of the Su(var)3-7 gene inserted between two FRTs. The Su(var)3-7 sequence contained three stop codons flanking an I-SceI cut site located in the 5' half of the gene. Using two different screening approaches, we obtained an allelic series composed of three mutant alleles. The three mutations are dominant suppressors of PEV. One behaves as a null mutation and results in a maternal-effect recessive lethal phenotype that can be rescued by a zygotic paternal wild-type gene. A P transposon zygotically expressing a Su(var)3-7 full-length cDNA also rescues the mutant phenotype. One hypomorphic allele is viable and the pleiotropic phenotype showed by adult flies indicates that rapidly and late dividing cells seem the most affected by reduced amounts of Su(var)3-7 protein. All three mutants were characterized at the molecular level. Each expresses a portion of the Su(var)3-7 protein that is unable to enter the nucleus and bind chromatin.