The Drosophila melanogaster su(s) gene product negatively regulates the expression of mutant alleles with transposon insertions in the 5′-transcribed region by an unknown mechanism. We have investigated here su(s) function through in vivo structure-function analysis, heterologous reporter gene assays, and in vivo transcriptional induction experiments. We have shown that mutations of two arginine-rich motifs (ARMs), an acidic region, or two CCCH zinc fingers affect the ability of Su(s) to downregulate the expression of an insertion mutant allele and to autoregulate genomic su(s) transgenes. Using yeast and HeLa cell assays, we found that, when tethered to the promoter region, the N- and C-terminal regions of Su(s) can repress reporter gene expression, and all three motifs, but most significantly the ARMs, contribute to the repression activity. Finally, we showed that, in vivo, Su(s) inhibits the transcriptional induction of a transgene with an insertion in the first exon but does not affect induction of a similar transgene with a consensus 5′ splice site near the upstream boundary of the insertion. Together, these results reveal a link between Su(s), transcription, and pre-mRNA processing