The Drosophila pair-rule gene, hairy (h), encodes a nuclear basic helix-loop-helix (bHLH) protein that regulates embryonic segmentation and adult bristle patterning. In both cases, the h protein behaves as a transcriptional repressor. In this study, we determined the molecular nature of 12 h alleles. One mutation maps within the HLH domain, consistent with h function requiring homodimerization or heterodimerization with other HLH proteins. A second mutation lies in the basic domain, suggesting that DNA binding is required for h activity. Several mutations show that the h C terminus, in particular the WRPW domain, is also required for h activity, perhaps by interacting with other proteins to mediate transcriptional repression. We show that the h protein in Drosophila virilis closely resembles that in D. melanogaster and includes completely conserved bHLH and WRPW domains.