The achaete-scute complex (AS-C) and the daughterless (da) genes encode helix-loop-helix proteins which have been shown to interact in vivo and to be required for neurogenesis. We show in vitro that heterodimers of three AS-C products with DA bind DNA strongly, whereas DA homodimers bind weakly and homo or heterocombinations of AS-C products not at all. Proteins unable to dimerize did not bind DNA. Target sequences for the heterodimers were found in the promoters of the hunchback and the achaete genes. Using sequences of the former we show that the DNA binding results obtained in vitro fully correlate with the ability of different combinations to activate the expression of a reporter gene in yeast. Embryos deficient for the lethal of scute gene fail to activate hunchback in some neural lineages in a pattern consistent with the lack of a member of a multigene family.