Earlier, we showed in a model system of the yellow gene of D. melanogaster that an increase in the EAST protein concentration leads to repression in bristles, the mechanism of which remained obscure. In this study, an inverted repeat was localized by genetic methods in the long terminal repeat (LTR) sequence of the MDG4 retrotransposon. This repeat includes the binding site for the Mad protein-the key component of the of TGF-β/BMP signaling cascade. The results of this work suggest that the Mad protein recruits to chromatin a regulatory complex that functionally interacts with the EAST protein. This complex either itself suppresses the yellow gene expression in bristles or moves the transgene to the nuclear regions with a high concentration of transcription repression factors.