Neuralized belongs to a group of genes involved in neurogenesis in Drosophila. Loss of function mutations lead to an overproduction of neurons at the expense of epidermal tissues. We have cloned the neuralized locus and examined its expression pattern during development. Expression is initially observed during embryogenesis in the neurogenic ectoderm and later in neuroblasts. In addition, transcripts are also found in sensory precursor cells during imaginal disc development. Other tissues that express neuralized include the embryonic mesoderm and specific follicle cells in the ovary. The predicted neuralized gene product is a highly basic protein with a novel motif that bears some resemblance to those found in nucleic acid-binding proteins. The first half of this motif has sequence similarity to the first half of a homeobox whereas the second half is similar to the helix-turn-helix structure of bacterial repressors.