Members of the LIM homeodomain family of transcription factors have been implicated in specifying cell identity in a range of species. In Drosophila three LIM homeobox genes, apterous, lim3 and isl, have been shown to control axon pathfinding of subsets of neurons within the embryo. Here we describe the isolation and characterization of another LIM homeobox gene in Drosophila termed dlim1, a homolog of the vertebrate Lim-1 gene. The sequence and expression of dLim1 is highly related to its vertebrate homologs. Within the Drosophila embryo, dLim1 is expressed in the head primordia, the brain lobes, and in distinct sets of motorneurons and interneurons within the ventral nerve cord. Comparatively in vertebrates, Lim-1 (Lhx1) along with Lim-3 (Lhx3), Gsh-4 (Lhx4), Isl-1 and Isl-2 are expressed in developing motorneurons along the spinal column, where their overlapping expression suggests a role for these genes in the establishment of specific motorneuron subtypes. dLim1 is absent from all cells expressing Isl, Lim3, and Apterous, indicating that these proteins function independently within the Drosophila embryo. To investigate the function of dlim1, we generated loss-of-function mutations within the locus. Our findings show that dlim1 is an essential gene that when mutated results in lethality near the larval-pupal boundary. In contrast to vertebrate Lim-1, dlim1 has no apparent role in anterior patterning of the Drosophila embryo. Our analysis shows that dlim1 has been evolutionarily conserved, however the Drosophila lim1 gene exhibits unique properties that distinguishes it from its vertebrate homologs.