MOTIVATION: In two-color microarray experiments, well-known differences exist in the labeling and hybridization efficiency of Cy3 and Cy5 dyes. Previous reports have revealed that these differences can vary on a gene-by-gene basis, an effect termed gene-specific dye bias. If uncorrected, this bias can influence the determination of differentially expressed genes. RESULTS: We show that the magnitude of the bias scales multiplicatively with signal intensity and is dependent on which nucleotide has been conjugated to the fluorescent dye. A method is proposed to account for gene-specific dye bias within a maximum-likelihood error modeling framework. Using two different labeling schemes, we show that correcting for gene-specific dye bias results in the superior identification of differentially expressed genes within this framework. Improvement is also possible in related ANOVA approaches. AVAILABILITY: A software implementation of this procedure is freely available at http://cellcircuits.org/VERA