Drosophila(L) alleles were first discovered similar to 100 years ago as spontaneous dominant mutants with characteristic developmental eye defects. However, the molecular basis forLdominant eye phenotypes has not been clearly understood. A previous work reported identification ofCG10109/as theLgene, but subsequent analyses suggested thatmay not be related toL. Here, we revisited theLgene to clarify this discrepancy and understand the basis for the dominance ofLmutations. Genetic analysis localized theLgene to, which encodes a homolog of the vertebrate zinc finger protein 423 (Zfp423) family transcriptional regulators. We demonstrate that RNAi knockdown ofalmost completely restores allLdominant alleles tested.Lrev6-3, a revertant allele of theL(2)dominant eye phenotype, has an inframe deletion in thecoding sequence. Molecular analysis ofLdominant mutants identified allele-specific insertions of natural transposons (roo[ ]L-1,hopper[ ]L-5, androo[ ]L (R)) or alterations of a preexisting transposon (L-2-specific mutations inroo[ ]Mohr) in theregion. In addition, we generated additionalL(2)-reversion alleles by CRISPR targeting at. These new loss-of-functionmutations suppress the dominantLeye phenotype. Oaz protein is not expressed in wild-type eye disc but is expressed ectopically inL(2)/+mutant eye disc. We induced male recombination betweenOaz-GAL4insertions and theL(2)mutation through homologous recombination. By using theL(2)-recombined GAL4 reporters, we show thatOaz-GAL4is expressed ectopically inL(2)eye imaginal disc. Taken together, our data suggest that neomorphicLeye phenotypes are likely due to misregulation ofby spontaneous transposon insertions.