The pair-rule segmentation gene hairy (h) is expressed and required in alternate metameres in the early Drosophila embryo. We show that h expression outside these domains, driven by an hsp70 promoter, suppresses the expression of fushi tarazu (ftz). The kinetics of action favor h acting directly as a transcriptional repressor. The resulting pattern defects, and the patterns of en and Ubx activity, can be explained if h acts via ftz and other pair-rule genes in the establishment of stable en domains. We present evidence that ftz is required for the initiation of Ubx transcription, but not for its maintenance.