The rotund (rn) mutation in Drosophila is unique in that its phenotype is limited to the deletion of specific distal parts, though not the extremities, of all adult appendages. We have cloned the rn gene, located at cytogenetic position 84D3,4, by chromosomal walking. The functional rn unit, defined genetically by the localization of 13 noncomplementing rn alleles, covers approximately 50 kb of DNA. Despite different developmental profiles, two transcript size classes (1.7 and 5.3 kb) from this region show an indistinguishable pattern of spatial expression in the imaginal discs at the white pupa stage. There is a high correlation between the specificity of the mutant phenotype and the accumulation of transcripts in the presumptive distal regions of the cuticle-forming epithelial cells of the affected discs; it is, in fact, the first gene reported whose expression is localized with respect to the proximo distal-forming axis. For both transcripts, we have also found, uniquely in the wing disc, expression limited to the anterior region of the mesodermally derived epithelial cells, which contribute to the muscles of the thorax.