The maize Activator/Dissociation (Ac/Ds) elements are able to replicate and transpose throughout the maize genome. Both elements preferentially insert into gene-rich regions altering the maize genome by creating unstable insertion alleles, stable derivative or excision alleles, or by altering the spatial or temporal regulation of gene expression. Here, we characterize an Ac insertion in the 59-UTR of the Pink Scutellum1 (Ps1) gene and five Ds derivatives generated through abortive transposition events. Characterization of Ps1 transcription initiation sites in this allelic series revealed several that began within the terminus of the Ac and Ds elements. Transcripts originating within Ds or Ac accumulated to lower levels than the wild-type Ps1 allele, but were often sufficient to rescue the seedling lethal phenotype associated with severe loss-of-function alleles. Transcription initiation sites were similar in Ac and Ds derivatives, suggesting that Ac transposase does not influence transcript initiation site selection. However, we show that Ac transposase can negatively regulate Ps1 transcript accumulation in a subset of Ds-insertion alleles resulting in a severe mutant phenotype. The role of maize transposons in gene evolution is discussed.