Genomic architecture lays the physical foundation of gene regulation. Interactions between chromatin boundary elements anchor chromatin loops, which can modulate enhancer-promoter interactions and the extent of active or repressive domains. We have been using the Drosophila ftz gene region as a model to study how chromatin boundaries regulate local gene expression. In Drosophila, the ftz gene is nested within the regulatory sequences of the Scr Hox gene. We have recently shown that SF1 and SF2, two boundary elements flanking the ftz region in D. melanogaster, form a stage-specific chromatin loop. This loop insulates the ftz gene from the interference by the surrounding Hox enhancers and the PcG-mediate repression. SF1 and SF2 cancel their enhancer-blocking activity when arranged in tandem. This is an indication of their pairing in vivo, which is consistant with our 3C data, providing a mechanism for the distal Scr enhancer to bypass their blocking. The ftz gene region is highly conserved among Drosophila species. However, it is found in an inverted orientation in several Drosophila species as compared to D. melanogaster. We found that SF1 and SF2 are located immediately outside the “flipped” ftz gene region in all 12 sequenced Drosophila species. Similar boundary-flanked and inverted intervals are found at multiple locations in the Drosophila Hox complexes. We hypothesize that boundary-anchored chromatin loops facilitate genomic rearrangement and buffer the pressure of misregulation caused by these rearrangement. To test this, we have cloned SF1 and SF2 homologs from D. wilistoni and D. virilis, two species with inverted ftz. We found that all these elements contain strong enhancer-blocking activities, as assayed in transgenic D. melanogaster. Importantly, they cancel each other when arranged in tandem. This suggests that SF1 and SF2 loop with each other in D. wilistoni and D. virilis. New data to extend our preliminary findings will be discussed.