Boundary elements or insulators subdivide eukaryotic chromosomes into a series of structurally and functionally autonomous domains. They ensure that the action of enhancers and silencers is restricted to the domain in which these regulatory elements reside. Three models, the roadblock, sink/decoy, and topological loop, have been proposed to explain the insulating activity of boundary elements. Strong predictions about how boundaries will function in different experimental contexts can be drawn from these models. In the studies reported here, we have designed assays that test these predictions. The results of our assays are inconsistent with the expectations of the roadblock and sink models. Instead, they support the topological loop model.