Insulators are a class of elements that define independent domains of gene function. The Drosophila gypsy insulator is proposed to establish regulatory isolation by forming loop domains that constrain interactions between transcriptional control elements. This supposition is based upon the observation that insertion of a single gypsy insulator between an enhancer and promoter blocks enhancer function, while insertion of two gypsy insulators promotes enhancer bypass and activation of transcription. To investigate this model, we determined whether non-gypsy insulators interacted with each other and with the gypsy insulator. Pairs of scs or scs′ insulators blocked enhancer function. Further, an intervening scs insulator did not block gypsy insulator interactions. Taken together, these data suggest that not all Drosophila insulators interact, with this property restricted to some insulators, such as gypsy. Three gypsy insulators inserted between an enhancer and promoter blocked enhancer function, indicating that gypsy insulator interactions may be restricted to pairs. Our studies imply that formation of loop domains may represent one of many mechanisms used by insulators to impart regulatory isolation.