Development of the Drosophila CNS midline cells is dependent upon the function of the single-minded (sim) gene. Sequence analysis shows that sim is a member of the basic-helix-loop-helix class of transcription factors. Cell fate experiments establish that sim is required for early events in midline cell development, including a synchronized cell division, proper formation of nerve cell precursors, and positive auto-regulation of its midline expression. Induction of ectopic sim protein under the control of the hsp70 promoter shows that sim can direct cells of the lateral CNS to exhibit midline cell morphology and patterns of gene expression. We propose that sim functions as a master developmental regulator of the CNS midline lineage.