In Drosophila, the very first steps in neurogenesis appear to be controlled by a small group of zygotically acting genes termed the neurogenic loci. Mutations in any of these genes result in a misrouting of epidermal lineages into the neural pathway. Morphological and molecular studies suggest that the correct ectodermal differentiation is mediated by a cell-cell interaction mechanism and that at least some of the neurogenic loci are involved in this mechanism. The molecular analyses of the neurogenic loci Notch and Delta revealed that the putative gene products are large transmembrane proteins with homology to mammalian epidermal growth factor. We describe here a molecular analysis of Enhancer of split [E(spl)], a third neurogenic locus, which displays striking genetic interactions with both Notch and Delta, suggesting a close functional relationship of the respective gene products. We provide evidence for a single genetic complementation group corresponding to a single transcription unit which is necessary for wild-type E(spl) function. P-element-mediated transformation indicates that this transcription unit includes functions associated with both the dominant E(spl)D mutation and the recessive visible allele groucho, and is necessary for the correct differentiation of the embryonic nervous system.