The Drosophila bithorax complex Abdominal-B (Abd-B) gene specifies parasegmental identity at the posterior end of the fly. The specific pattern of Abd-B expression in each parasegment (PS) determines its identity and, in PS10-13, Abd-B expression is controlled by four parasegment-specific cis-regulatory domains, iab-5 to iab-8, respectively. In order to properly determine parasegmental identity, these four cis-regulatory domains must function autonomously during both the initiation and maintenance phases of BX-C regulation. The studies reported here demonstrate that the (centromere) distal end of iab-7 domain is delimited by the Fab-8 boundary. Initiators that specify PS12 identity are located on the proximal iab-7 side of Fab-8, while initiators that specify PS13 identity are located on the distal side of Fab-8, in iab-8. We use transgene assays to demonstrate that Fab-8 has enhancer blocking activity and that it can insulate reporter constructs from the regulatory action of the iab-7 and iab-8 initiators. We also show that the Fab-8 boundary defines the realm of action of a nearby iab-8 Polycomb Response Element, preventing this element from ectopically silencing the adjacent domain. Finally, we demonstrate that the insulating activity of the Fab-8 boundary in BX-C is absolutely essential for the proper specification of parasegmental identity by the iab-7 and iab-8 cis-regulatory domains. Fab-8 together with the previously identified Fab-7 boundary delimit the first genetically defined higher order domain in a multicellular eukaryote.