Despite the well-documented role of remote enhancers in controlling developmental gene expression, the mechanisms that allocate enhancers to genes are poorly characterized. Here, we investigate the cis-regulatory organization of the locus containing the Tfap2c and Bmp7 genes in vivo, using a series of engineered chromosomal rearrangements. While these genes lie adjacent to one another, we demonstrate that they are independently regulated by distinct sets of enhancers, which in turn define non-overlapping regulatory domains. Chromosome conformation capture experiments reveal a corresponding partition of the locus in two distinct structural entities, demarcated by a discrete transition zone. The impact of engineered chromosomal rearrangements on the topology of the locus and the resultant gene expression changes indicate that this transition zone functionally organizes the structural partition of the locus, thereby defining enhancer-target gene allocation. This partition is, however, not absolute: we show that it allows competing interactions across it that may be non-productive for the competing gene, but modulate expression of the competed one. Altogether, these data highlight the prime role of the topological organization of the genome in long-distance regulation of gene expression.