Homeobox genes have been shown to control the determination of positional, tissue and cellular identity during the development of the fruitfly Drosophila melanogaster. Because genes involved in the determination of internal structures derived from neural, mesodermal and endodermal tissues may have been overlooked in conventional genetic screens, we undertook the identification of new homeobox genes expressed in these internal tissues. Here we describe the characterization of one of these new Drosophila homeobox genes, called brain-specific-homeobox (bsh). In embryos, bsh is expressed exclusively in the brain. bsh protein accumulates in approximately 30 cells in each brain hemisphere. One of these bsh expressing cells is closely associated with the terminus of the larval visual nerve (Bolwig's nerve). While deletions of chromosomal interval containing the bsh gene show no dramatic changes in embryonic brain morphology, the expression pattern of the bsh gene suggests that it may play a highly specialized role in the determination and function of cell type in the Drosophila brain.