The D. melanogaster alcohol dehydrogenase (Adh) gene is transcribed from two tandem promoters that are differentially utilized at various stages during development. To determine the mechanism of promoter selectivity, we have analyzed the activity of the Adh promoters both in vitro and in transfected cells. We found that selective promoter utilization is controlled by distinct initiator elements. Reconstitution of Adh transcription with purified components requires a specific TBP-TAF complex that, in concert with TFIIA, directs differential Adh promoter transcription. Fractionation of this TBP-TAF complex reveals that TAFII150 is required for discrimination between the proximal and distal promoters. We propose a mechanism for regulating differential promoter utilization during Drosophila development that involves the recognition of specific initiator elements by TAFs in the TFIID complex.