We describe the cloning, expression and phenotypic characterisation of repo, a gene from Drosophila melanogaster that is essential for the differentiation and maintenance of glia function. It is not, however, required for the initial determination of glial cells. In the embryo, the gene, which encodes a homeodomain protein, is expressed exclusively in all developing glia and closely related cells in both the central and peripheral nervous systems. The only observed exceptions in the CNS are the midline glia derived from the mesectoderm and two of three segmental nerve root glial cells. Using a polyclonal antibody we traced the spatial and temporal pattern of the protein expression in detail. Embryos homozygous for null alleles of the protein exhibit late developmental defects in the nervous system, including a reduction in the number of glial cells, disrupted fasciculation of axons, and the inhibition of ventral nerve cord condensation. The expression of an early glial-specific marker is unaffected in such homozygotes. By contrast, the expression of late glial-specific markers is either substantially reduced or absent. The specificity of expression is also observed in the locust Schistocerca gregaria and is thus evolutionarily conserved.