This report describes the genetic analysis of a region of the third chromosome of Drosophila melanogaster extending from 87D2-4 to 87E12-F1, an interval of 23 or 24 polytene chromosome bands. This region includes the rosy (ry, 3-52.0) locus, carrying the structural information for xanthine dehydrogenase (XDH). We have, in recent years, focused attention on the genetic regulation of the rosy locus and, therefore, wished to ascertain in detail the immediate genetic environment of this locus. Specifically, we question if rosy is a solitary genetic unit or part of a large complex genetic unit encompassing adjacent genes. Our data also provide opportunity to examine further the relationship between euchromatic gene distribution and polytene chromosome structure.----The results of our genetic dissection of the rosy micro-region substantiate the conclusion drawn earlier (SCHALET, KERNAGHAN and CHOVNICK 1964) that the rosy locus is the only gene in this region concerned with XDH activity and that all adjacent genetic units are functionally, as well as spatially, distinct from the rosy gene. Within the rosy micro-region, we observed a close correspondence between the number of complementation groups (21) and the number of polytene chromosome bands (23 or 24). Consideration of this latter observation in conjunction with those of similar studies of other chhromosomal regions supports the hypothesis that each polytene chromosome band corresponds to a single genetic unit.