The decision of an ectodermal cell to take on a neural or an epidermal fate depends on its interactions with the neighbouring cells. In Drosophila melanogaster, the available evidence suggests that a regulatory signal necessary for epidermal commitment is built by the products of the so-called neurogenic genes. We have cloned 180 kb of genomic DNA surrounding the neurogenic gene Delta (Dl). Restriction fragment-length polymorphisms were mapped to a region of 25 kb. These 25 kb of DNA are assumed to contain essential parts, or all, of the Dl gene. Northern blots detect two developmentally regulated transcripts, of 5.4 and 4.6 kb, which are associated with the region where the mutants map. Serveral cDNA clones were recovered from embryonic cDNA libraries by homology to the 25 kb of genomic DNA. The complete sequence of a cDNA clone containing an insert of 4.73 kb was determined. The conceptual translation of the longest open reading frame yields a protein of 880 amino acids. This protein displays characteristics of a membrane protein, with intercellular, transmembrane and extracellular domains. The extracellular domain contains a tandem array of nine EGF-like repeats. In in situ hybridizations to tissue sections, transcripts homologous to Dl are detected in all territories with neurogenic abilities, e.g. the neurogenic ectoderm and the primordia of the sensory organs. Initially all cells of these neurogenic territories express Dl, but later on transcription of Dl becomes restricted to the cells that have adopted the neural fate. The topological specificity in the transcription of Dl corresponds to the one expected for a regulatory signal that mediates epidermal commitment.