Through enhancer detection screens we have isolated and cloned an essential gene that is expressed in the neuronal precursors and their daughter cells in the Drosophila embryonic peripheral nervous system (PNS). The gene is named couch potato (cpo), because several partial loss-of-function alleles cause hypoactive behavior in adults. Here, we present evidence that the structure of the cpo locus is unusually complex: It spans > 100 kb, encodes three different messages, is differentially spliced, lacks an AUG initiation codon, and may encode three different proteins. Two putative Cpo proteins contain similar but nonidentical RNA-binding domains that are most homologous to the RNA-binding domains of the Drosophila embryonic lethal abnormal vision (elav) gene and a human brain protein that has been implicated in a paraneoplastic sensory neuropathy. Polyclonal antibodies raised against a fusion protein localize Cpo to the nucleus. Immunocytochemical studies demonstrate that the achaete-scute and daughterless genes are required for proper expression of cpo in the PNS but not in other cells that express cpo. On the basis of our observations, we present a model in which cpo is controlled by genes that determine cells to become PNS cells. Cpo, in turn, may control the processing of RNA molecules required for the proper functioning of the PNS.