Synergistic interactions between the maternal regulatory factor dorsal (dl) and basic helix-loop-helix (bHLH) activators are essential for initiating differentiation of the mesoderm and neuroectoderm in the early Drosophila embryo. Here we present evidence that dl-bHLH interactions mediating gene expression in the neuroectoderm and mesoderm are fundamentally distinct. Close proximity of dl and bHLH binding sites is essential for the synergistic activation of gene expression in the lateral neuroectoderm, where there are diminishing levels of the dl regulatory gradient. In contrast, sharp on/off patterns of gene expression in the presumptive mesoderm do not require linkage of these sites. Analysis of minimal and synthetic promoter elements suggests that dl and bHLH activators, such as twist, might interact with different rate-limiting components of the transcription complex. These results are consistent with two distinct modes of dl-bHLH synergy: cooperative binding to DNA (requiring linkage of sites) and synergistic contact of basal transcription factors (not requiring linkage). Finally, the characterization of a 57 bp synthetic minimal stripe unit (MSU) provides evidence for a third tier of dl-bHLH synergy. Tandem copies of the MSU function as a bona fide enhancer and can mediate neuroectoderm expression in transgenic embryos even when placed 4.5 kb downstream of a test promoter. Multiple copies of the MSU function synergistically only when linked, but not when separated. We propose that this linkage requirement provides the basis for the evolution of modular promoters composed of discrete, non-overlapping enhancers.