Specification of cell identity and the proper functioning of a mature cell depend on precise regulation of gene expression. Both binary ON/OFF regulation of transcription, as well as more fine-tuned control of transcription levels in the ON state, are required to define cell types. The Drosophila melanogaster Hox gene, Ultrabithorax (Ubx), exhibits both of these modes of control during development. While ON/OFF regulation is needed to specify the fate of the developing wing (Ubx OFF) and haltere (Ubx ON), the levels of Ubx within the haltere differ between compartments along the proximal-distal axis. Here, we identify and molecularly dissect the novel contribution of a previously identified Ubx cis-regulatory module (CRM), anterobithorax (abx), to a negative auto-regulatory loop that decreases Ubx expression in the proximal compartment of the haltere as compared to the distal compartment. We find that Ubx, in complex with the known Hox cofactors, Homothorax (Hth) and Extradenticle (Exd), acts through low-affinity Ubx-Exd binding sites to reduce the levels of Ubx transcription in the proximal compartment. Importantly, we also reveal that Ubx-Exd-binding site mutations sufficient to result in de-repression of abx activity in a transgenic context are not sufficient to de-repress Ubx expression when mutated at the endogenous locus, suggesting the presence of multiple mechanisms through which Ubx-mediated repression occurs. Our results underscore the complementary nature of CRM analysis through transgenic reporter assays and genome modification of the endogenous locus; but, they also highlight the increasing need to understand gene regulation within the native context to capture the potential input of multiple genomic elements on gene control.