The maternal effect gene fsh is involved in the establishment of segments and the specification of their identities; the progeny of mutant females are missing portions of thoracic and abdominal segments, and may have homeotic transformations of third thoracic segments to second thoracic segments. The fsh locus interacts synergistically with loci such as Ubx and trx in the production of homeotic transformations. We have characterized cDNA clones corresponding to the major fsh transcripts expressed in ovaries and early embryos, and to a pupal transcript. The expression of fsh transcripts in ovaries is restricted to the germline; in developing embryos, transcripts are found throughout the cytoplasm. The different ovarian/embryonic transcripts (7.6 and 5.9 kb) are generated by use of alternative polyadenylation and splice sites. These transcripts encode two large predicted proteins of 110 and 205 kDa that have unusual amino acid compositions: 40% of the residues are glycine, alanine, or serine, and there are several regions of homopolymers and simple sequence repeats. Hydropathy analysis indicates that these proteins span the membrane. We suggest that the expression of fsh proteins in the membrane of the embryo is required for proper functioning of genes such as Ubx in the specification of segmental identity.