Despite decades of research, morphogenesis along the various body axes remains one of the major mysteries in developmental biology. A milestone in the field was the realisation that a set of closely related regulators, called Hox genes, specifies the identity of body segments along the anterior-posterior (AP) axis in most animals. Hox genes have been highly conserved throughout metazoan evolution and code for homeodomain-containing transcription factors. Thus, they exert their function mainly through activation or repression of downstream genes. However, while much is known about Hox gene structure and molecular function, only a few target genes have been identified and studied in detail. Our knowledge of Hox downstream genes is therefore far from complete and consequently Hox-controlled morphogenesis is still poorly understood. Genome-wide approaches have facilitated the identification of large numbers of Hox downstream genes both in Drosophila and vertebrates, and represent a crucial step towards a comprehensive understanding of how Hox proteins drive morphological diversification. In this review, we focus on the role of Hox genes in shaping segmental morphologies along the AP axis in Drosophila, discuss some of the conclusions drawn from analyses of large target gene sets and highlight methods that could be used to gain a more thorough understanding of Hox molecular function. In addition, the mechanisms of Hox target gene regulation are considered with special emphasis on recent findings and their implications for Hox protein specificity in the context of the whole organism.