The single-minded gene functions as a master developmental regulator within the midline cell lineage of the embryonic central nervous system of Drosophila melanogaster. Genetic experiments suggest that Single-minded can function as a transcriptional activator. Regions of the Single-minded protein were fused to the DNA binding domain of the mammalian transcription factor Sp1 and shown to activate transcription from a reporter gene linked to Sp1 binding sites. Three independent activation domains were identified in the carboxy terminal region of Single-minded that include areas rich in serine, threonine, glutamine and proline residues. Germ line transformation experiments indicate that the carboxy terminal activation domains, the PAS dimerization domain, and the putative DNA binding basic domain of Single-minded are required for expression of CNS midline genes in vivo. These results define in vivo a functional activation domain within Single-minded and suggest a model in which Single-minded activates transcription through a direct interaction with promoter elements of CNS midline genes.