The expression of the sloppy-paired 1 (slp1) gene in the gastrula stage Drosophila embryo is controlled by the interplay of four transcription factors Runt, Even-skipped (Eve), Fushi-tarazu (Ftz), and Odd-paired (Opa) with two distinct cis-regulatory enhancer elements, the distal early stripe element (DESE) and the proximal early stripe element (PESE). The stripe pattern of slp1 is the result of non-additive interactions between these two enhancers and is context-dependent. Using chromatin immunoprecipitation (ChIP) to examine a number of reporter constructs, I found DESE mediates Runt dependent activation by facilitating pre-initiation complex formation on the slp1 promoter. This DESE-dependent activation is influenced by the extent of promoter- proximal DNA upstream of the transcription start site and involves a mechanism that induces nucleosome depletion around the promoter. This effect is specifically important for DESE activation but not PESE activation. ChIP experiments comparing wild-type versus repressed states of DESE-lacZ and PESE-lacZ reporter genes indicate that Eve represses PESE-lacZ expression by blocking the elongation step of the transcription cycle. This repression involves the regulated association of the elongation factor P-TEFb and phosphorylation of Ser2 in the C-terminal domain of RNA polymerase II. Runt and Ftz repress both DESE and PESE. Interestingly, Runt and Ftz repress DESE-lacZ by the same mechanism as Eve dependent repression of PESE, that is by inhibition of transcription elongation. However, Runt and Ftz repress PESE-lacZ by blocking transcription initiation. Analysis of the conserved domains of Runt revealed that C-terminal domain of Runt (region VIII) is involved in the repression of both DESE and PESE, and that this region is not required for activation of DESE.