Nervous system-specific eve mutants were created by removing regulatory elements from a 16 kb transgene capable of complete rescue of normal eve function. When transgenes lacking the regulatory element for either RP2+a/pCC, EL or U/CQ neurons were placed in an eve-null background, eve expression was completely eliminated in the corresponding neurons, without affecting other aspects of eve expression. Many of these transgenic flies were able to survive to fertile adulthood. In the RP2+a/pCC mutant flies: (1) both RP2 and aCC showed abnormal axonal projection patterns, failing to innervate their normal target muscles; (2) the cell bodies of these neurons were positioned abnormally; and (3) in contrast to the wild type, pCC axons often crossed the midline. The Eve HD alone was able to provide a weak, partial rescue of the mutant phenotype, while both the Groucho-dependent and -independent repressor domains contributed equally to full rescue of each aspect of the mutant phenotype. Complete rescue was also obtained with a chimeric protein containing the Eve HD and the Engrailed repressor domain. Consistent with the apparent sufficiency of repressor function, a fusion protein between the Gal4 DNA-binding domain and Eve repressor domains was capable of actively repressing UAS target genes in these neurons. A key target of the repressor function of Eve was Drosophila Hb9, the derepression of which correlated with the mutant phenotype in individual eve-mutant neurons. Finally, homologues of Eve from diverse species were able to rescue the eve mutant phenotype, indicating conservation of both targeting and repression functions in the nervous system.