The DOPA decarboxylase gene (Ddc) belongs to the "early-late" class of ecdysone-inducible genes in Drosophila melanogaster. Its expression is up-regulated in epidermal tissues by the ecdysone receptor acting through a response element, EcRE. In this paper, we show that another member of the nuclear receptor superfamily, DHR38, may act as a repressor of epidermal Ddc while inducing Ddc expression in neuronal cells. DHR38 does not behave as a classical co-repressor of the ecdysone receptor though, since the site through which DHR38 acts is distinct from the EcRE. Ectopic expression of a Dhr38 cDNA from a heat-shock promoter completely repressed transcription from the endogenous Ddc promoter and from an intact reporter construct in the hypoderm and in imaginal discs. Ectopic DHR38 had no effect on the transcription of a reporter driven by a Ddc fragment missing the DHR38 binding site. Neither reporter expression nor endogenous Ddc transcript levels were affected in a Dhr38 mutant background. Because most mutant organisms pupariate apparently normally and many of these survive to eclose, we believe that some functional redundancy exists within the Dhr38 regulatory network operating in epidermal tissues. In contrast to its apparent repressor function in epidermal tissues, DHR38 may act as a positive regulator of neural Ddc expression. Ectopic expression of DHR38 throughout the CNS induced as much as a 20-fold increase in Ddc transcripts in the set of neurons in which DDC normally appears.