The closely linked POU domain genes pdm-1 and pdm-2 are first expressed early during cellularization in the presumptive abdomen in a broad domain that soon resolves into two stripes. This expression pattern is regulated by the same mechanisms that define gap gene expression domains. The borders of pdm-1 expression are set by the terminal system genes torso and tailless, and the gradient morphogen encoded by hunchback. The resolution into two stripes is controlled by the gap gene knirps. Ectopic expression of pdm-1 at the cellular blastoderm stage leads to disruptions in pair rule gene expression and in anterior segmentation. The broad abdominal domain of pdm-1 protein is lacking in nanos- mutant embryos, and ectopic pdm-1 expression in nanos- embryos leads to a partial restoration of abdominal segmentation. These data suggest that the pdm genes may act in segmentation near the level of the zygotic gap genes.