Drosophila Polycomb group response elements (PRE) silence neighboring genes, but silencing can be blocked by one copy of the Su(Hw) insulator element. We show here that Polycomb group (PcG) proteins can spread from a PRE in the flanking chromatin region and that PRE blocking depends on a physical barrier established by the insulator to PcG protein spreading. On the other hand, PRE-mediated silencing can bypass two Su(Hw) insulators to repress a downstream reporter gene. Strikingly, insulator bypass involves targeting of PcG proteins to the downstream promoter, while they are completely excluded from the intervening insulated domain. This shows that PRE-dependent silencing is compatible with looping of the PRE in order to bring PcG proteins in contact with the promoter and does not require the coating of the whole chromatin domain between PRE and promoter.