Krüppel and caudal genes are both required for normal segmentation of the embryo, and the developmental regulatory gene cut is necessary for the normal specification of external sensory organs. These three genes are also expressed in the Malpighian tubules before and during differentiation. Two of the genes, Krüppel and cut, are known to be required for development of the tubules. We report that the absence of maternal and zygotic caudal function reduces their normal growth and elongation. Normal Krüppel function, which is known to be required for caudal expression, is also required for cut expression, while cut and caudal are expressed independently of each other. Cell type transformations of Malpighian tubules were studied by examining the effects of mutations on the expression of markers specific to Malpighian tubules, hindgut, or midgut of normal embryos. Loss of Krüppel activity confers hindgut characteristics on those cells that normally form the Malpighian tubules with all markers tested. Loss of cut function alters the expression of some markers but not others. The pathway of tissue specific gene regulation, apparently, branches beyond Krüppel to form at least a cut and a caudal branch.