Three main events characterize the development of the proximal-distal axis of the Drosophila wing disc: first, generation of nested circular domains defined by different combinations of gene expression; second, activation of wingless (wg) gene expression in a ring of cells; and third, an increase of cell number in each domain in response to Wg. The mechanisms by which these domains of gene expression are established and maintained are unknown. We have analyzed the role of the gene zinc finger homeodomain 2 (zfh2). We report that in discs lacking zfh2 the limits of the expression domains of the genes tsh, nub, rn, dve and nab coincide, and expression of wg in the wing hinge, is lost. We show that zfh2 expression is delimited distally by Vg, Nub and Dpp signalling, and proximally by Tsh and Dpp. Distal repression of zfh2 permits activation of nab in the wing blade and wg in the wing hinge. We suggest that the proximal-most wing fate, the hinge, is specified first and that later repression of zfh2 permits specification of the distal-most fate, the wing blade. We propose that proximal-distal axis development is achieved by a combination of two strategies: on one hand a process involving proximal to distal specification, with the wing hinge specified first followed later by the distal wing blade; on the other hand, early specification of the proximal-distal domains by different combinations of gene expression. The results we present here indicate that Zfh2 plays a critical role in both processes.