Somatic myogenesis in Drosophila relies on the reiterative activity of the basic helix-loop-helix transcriptional regulator, Twist (Twi). How Twi directs multiple cell fate decisions over the course of mesoderm and muscle development is unclear. Previous work has shown that Twi is regulated by its dimerization partner: Twi homodimers activate genes necessary for somatic myogenesis, whereas Twi/Daughterless (Da) heterodimers lead to the repression of these genes. Here, we examine the nature of Twi/Da heterodimer repressive activity. Analysis of the Da protein structure revealed a Da repression (REP) domain, which is required for Twi/Da-mediated repression of myogenic genes, such as Dmef2, both in tissue culture and in vivo. This domain is crucial for the allocation of mesodermal cells to distinct fates, such as heart, gut and body wall muscle. By contrast, the REP domain is not required in vivo during later stages of myogenesis, even though Twi activity is required for muscles to achieve their final pattern and morphology. Taken together, we present evidence that the repressive activity of the Twi/Da dimer is dependent on the Da REP domain and that the activity of the REP domain is sensitive to tissue context and developmental timing.