Chromatin insulators block the action of transcriptional enhancers when interposed between an enhancer and a promoter. In this study, we examined the role of chromatin loops formed by two unrelated insulators, gypsy and Fab-7, in their enhancer-blocking activity. To test for this activity, we selected the white reporter gene that is activated by the eye-specific enhancer. The results showed that one copy of the gypsy or Fab-7 insulator failed to block the eye enhancer in most of genomic sites, whereas a chromatin loop formed by two gypsy insulators flanking either the eye enhancer or the reporter completely blocked white stimulation by the enhancer. However, strong enhancer blocking was achieved due not only to chromatin loop formation but also to the direct interaction of the gypsy insulator with the eye enhancer, which was confirmed by the 3C assay. In particular, it was observed that Mod(mdg4)-67.2, a component of the gypsy insulator, interacted with the Zeste protein, which is critical for the eye enhancer-white promoter communication. These results suggest that efficient enhancer blocking depends on the combination of two factors: chromatin loop formation by paired insulators, which generates physical constraints for enhancer-promoter communication, and the direct interaction of proteins recruited to an insulator and to the enhancer-promoter pair.