Elmo, Elsa and other costumed characters are getting boxed in at Times Square.

New rules went into effect Tuesday that restrict street performers to designated painted rectangles on the pedestrian plaza.

The boundaries apply to anyone who is performing a service where there can be an exchange of money, including the costumed characters who for pose for pictures for tips and vendors selling tickets to bus tours or comedy shows.

Those caught out of bounds could be arrested and face a fine of up to $500 or jail time.

The color-coded zones are meant to rein in pushy panhandlers who have flooded the area, in some cases harassing passers-by and leading to assaults and arrests.

Carmen Peles, from New Jersey, was dressed up as Elsa from "Frozen" and said she was already feeling locked up.

"Everybody agrees, we feel like we are in a jail," she said. "You spend an hour in a box and see how you feel."

Police Capt. Robert O'Hare, who heads a special Times Square unit, was out on patrol accompanied by police department lawyers as the new rules took effect.

"We're not looking to hurt people here," O'Hare said. "If there's someone who's confused, we're here for clarification as well as enforcement."

Sandy Kane, the Naked Cowgirl, lives in Manhattan. She has been playing guitar while wearing only pasties and underwear for nine years and thinks the rules are unfair.

There are really only a few troublemakers and "the police should do their job and arrest them and leave the rest of us alone," she said.

Michelle Wallin was visiting from Minneapolis and enthusiastically took a picture of her son with Elmo. As soon as the picture was snapped, Elmo pulled out a small laminated card that just said "Tips!" and presented it to Wallin, who retrieved a few coins from her purse and dropped them in the furry outstretched hand.

"I think (the designated squares) are a great idea, especially when you have kids," said Wallin. "You get the choice of whether or not you want to engage."

Around lunchtime, Titus Gandy, a protégé of the famous Naked Cowboy, stood alone in one of the teal squares wearing only underwear, boots and a cowboy hat. He says he doubts his bottom line will suffer.

"Nothing can affect my business unless they tell me I have to go home," said Gandy.