Independent transgene insertions differ in expression based on their location in the genome; these position effects are of interest because they reflect the influence of genome organization on gene regulation. Position effects also represent potentially insurmountable obstacles to the rigorous functional comparison of homologous genes from different species because (i) quantitative variation in expression of each gene across genomic positions (generalized position effects, or GPEs) may overwhelm differences between the genes of interest, or (ii) divergent genes may be differentially sensitive to position effects, reflecting unique interactions between each gene and its genomic milieu (lineage-specific position effects, or LSPEs). We have investigated both types of position-effect variation by applying our method of transgene coplacement, which allows comparisons of transgenes in the same position in the genome of Drosophila melanogaster. Here we report an experimental test for LSPE in Drosophila. The alcohol dehydrogenase (Adh) genes of D. melanogaster and Drosophila affinidisjuncta differ in both tissue distribution and amounts of ADH activity. Despite this striking regulatory divergence, we found a very high correlation in overall ADH activity between the genes of the two species when placed in the same genomic position as assayed in otherwise Adh-null adults and larvae. These results argue against the influence of LSPE for these sequences, although the effects of GPE are significant. Our new findings validate the coplacement approach and show that it greatly magnifies the power to detect differences in expression between transgenes. Transgene coplacement thus dramatically extends the range of functional and evolutionary questions that can be addressed by transgenic technology.