It is now well understood that chromatin structure is perturbed in the neighborhood of expressed genes. This is most obvious in the neighborhood of promoters and enhancers, where hypersensitivity to nucleases marks sites that no longer carry canonical nucleosomes, and to which transcription factors bind. To study the relationship between transcription factor binding and the generation of these hypersensitive regions, we mutated individual cis-acting regulatory elements within the enhancer that lies between the chicken beta- and epsilon-globin genes. Constructions carrying the mutant enhancer were introduced by stable transformation into an avian erythroid cell line. We observed that weakening the enhancer resulted in creation of two classes of site: those still completely accessible to nuclease attack and those that were completely blocked. This all-or-none behavior suggests a mechanism by which chromatin structure can act to sharpen the response of developmental systems to changing concentrations of regulatory factors. Another problem raised by chromatin structure concerns the establishment of boundaries between active and inactive chromatin domains. We have identified a DNA element at the 5' end of the chicken beta-globin locus, near such a boundary, that has the properties of an insulator; in test constructions, it blocks the action of an enhancer on a promoter when it is placed between them. We describe the properties and partial dissection of this sequence. A third problem is posed by the continued presence of nucleosomes on transcribed genes, which might prevent the passage of RNA polymerase. We show, however, that a prokaryotic polymerase can transcribe through a histone octamer on a simple chromatin template. The analysis of this process reveals that an octamer is capable of transferring from a position in front of the polymerase to one behind, without ever losing its attachment to the DNA.