During Drosophila embryogenesis the CNS midline cells have organizing activities that are required for proper elaboration of the axon scaffold and differentiation of neighboring neuroectodermal and mesodermal cells. CNS midline development is dependent on Single-minded (Sim), a basic-helix-loop-helix (bHLH)-PAS transcription factor. We show here that Fish-hook (Fish), a Sox HMG domain protein, and Drifter (Dfr), a POU domain protein, act in concert with Single-minded to control midline gene expression. single-minded, fish-hook, and drifter are all expressed in developing midline cells, and both loss- and gain-of-function assays revealed genetic interactions between these genes. The corresponding proteins bind to DNA sites present in a 1 kb midline enhancer from the slit gene and regulate the activity of this enhancer in cultured Drosophila Schneider line 2 cells. Fish-hook directly associates with the PAS domain of Single-minded and the POU domain of Drifter; the three proteins can together form a ternary complex in yeast. In addition, Fish can form homodimers and also associates with other bHLH-PAS and POU proteins. These results indicate that midline gene regulation involves the coordinate functions of three distinct types of transcription factors. Functional interactions between members of these protein families may be important for numerous developmental and physiological processes.