The fork head (fkh) domain defines the DNA-binding region of a family of transcription factors which has been implicated in regulating cell fate decisions across species lines. We have cloned and molecularly characterized the crocodile (croc) gene which encodes a new family member from Drosophila. croc is expressed in the head anlagen of the blastoderm embryo under the control of the anterior, the dorsoventral and the terminal maternal organizer systems. The croc mutant phenotype indicates that the croc wild-type gene is required to function as an early patterning gene in the anterior-most blastoderm head segment anlage and for the establishment of a specific head skeletal structure that derives from the non-adjacent intercalary segment at a later stage of embryogenesis. As an early patterning gene, croc exerts unusual properties which do not allow it to be grouped among the established segmentation genes. A single-site mutation within the croc fkh domain, which causes a replacement of the first out of four conserved amino acid residues thought to be involved in the coordinate binding of Mg2+, abolishes the DNA binding of the protein in vitro. In view of the resulting lack-of-function mutant phenotype, it appears likely that metal binding by the affected region of the fkh domain is crucial for proper folding of the DNA-binding structure.