The segment-polarity class of segmentation genes in Drosophila are primarily involved in the specification of sub-segmental units. In addition, some of the segment-polarity genes have been shown to specify cell fates within the central nervous system. One of these loci, gooseberry, consists of two divergently transcribed genes, gooseberry and gooseberry neuro, which share a paired box as well as a paired-type homebox. Here, the expression patterns of the two gooseberry gene products are described in detail. The gooseberry protein appears in a characteristic segment-polarity pattern of stripes at gastrulation and persists until head involution. It is initially restricted to the ectodermal and neuroectodermal germ layer, but is later detected in mesodermal and neuronal cells as well. The gooseberry neuro protein first appears during germ band extension in cells of the central nervous system and also, much later, in epidermal stripes and in a small number of muscle cells. P-element-mediated transformation with the gooseberry gene has been used to demonstrate that gooseberry transactivates gooseberry neuro and is sufficient to rescue the gooseberry cuticular phenotype in the absence of gooseberry neuro.