We have studied a 40-bp upstream regulatory region of the DOPA decarboxylase gene (Ddc) which is important for cell-specific expression in the Drosophila central nervous system (CNS). This region contains two redundant elements which when simultaneously mutated result in lowered DDC expression in serotonin neurons. We uncovered a protein binding site within one of these elements and have cloned a factor which binds to the site. This factor is the product of the zfh-2 gene, a complex homeodomain/zinc finger protein previously identified by binding to an opsin regulatory element. The in vivo profile of ZFH-2 in the larval CNS shows intriguing overlap with DDC in specific serotonin and dopamine neurons. We show that ZFH-2 is related to a human transcription factor ATBF1. The multiple homeodomain and zinc finger motifs in these two proteins show a similar linear arrangement which implies coordinate action among the motifs. In addition, the homology defines a new homeodomain subtype.