Using the well-characterised paradigm of Drosophila sensory nervous system development, we examine the functional distinctness of the Amos and Atonal (Ato) proneural transcription factors, which have different mutant phenotypes but share very high similarity in their signature bHLH domains. Using misexpression and mutant rescue assays, we show that Ato and Amos proteins have abundantly distinct intrinsic proneural capabilities in much of the ectoderm. The eye, however, is an exception: here both proteins share the capability to direct the R8 photoreceptor fate choice. Therefore, functional distinctness between these closely related transcription factors vary with developmental context, indicating different molecular mechanisms of specificity in different contexts. Consistent with this, the structural basis for their distinctness also varies depending upon the function in question. In previous studies of neural bHLH factors, specificity invariably mapped to the bHLH domain sequence. Similarly, and despite their high similarity, much of the Amos' specificity relative to Ato maps to Amos-specific residues in its bHLH domain. For Ato-specific functions, however, the Amos bHLH domain can substitute for that of Ato. Consequently, Ato's specificity relative to Amos requires the non-bHLH portion of the Ato protein. Ato provides a powerful precedence for a role of non-bHLH sequences in modulating bHLH functional specificity. This has implications for structural and functional comparisons of other closely related transcription factors, and for understanding the molecular basis of specificity.