H-2Z1 is an enhancer trap transgenic mouse line in which the lacZ reporter delineates the somatosensory area of the cerebral cortex where it is expressed in a subset of layer IV neurons. In the search of somatosensory specific genes or regulatory sequences, we mapped the H-2Z1 transgene insertion site to chromosome 17, 100 and 460 kb away from Tbc1d5 and Satb1 flanking genes. We show here that insertion of the H-2Z1 transgene results in three distinct outcomes. First, a genetic background-sensitive expression of lacZ in several brain and body structures. While four genes in a 1 Mb region around the insertion are expressed in the barrel cortex, H-2Z1 expression resembles more that of its two direct neighbors. Moreover, H-2Z1 closely reports most of the body and brain expression sites of the Satb1 chromatin remodeling gene including tooth buds, thymic epithelium, pontine nuclei, fastigial cerebellar nuclei, and cerebral cortex. Second, the H-2Z1 transgene causes insertional mutagenesis of Tbc1d5 and Satb1, leading to a strong decrease in their expressions. Finally, insertion of H-2Z1 affects the differentiation of a subset of cortical GABAergic interneurons, a possible consequence of downregulation of Satb1 expression. Thus, the H-2Z1 "somatosensory" transgene is inserted in the regulatory landscape of two genes highly expressed in the developing somatosensory cortex and reports for a subdomain of their expression profiles. Together, our data suggest that regulation of H-2Z1 expression results from local and remote genetic interactions.