A number of the pattern formation genes expressed in the Drosophila epidermis are also expressed in the developing CNS. It is uncertain how these genes contribute to neuronal differentiation. Here we show that the normal differentiation of the serotonin neurons of the Drosophila nerve cord is dependent on the expression of two pattern formation genes, huckebein (hkb) and engrailed (en). hkb and en gene products coexpress uniquely in the serotonin neurons and in neuroblast 7-3 (NB 7-3), indicating that as in the grasshopper, NB 7-3 is the progenitor for these neurons. Both genes are important for differentiation of this lineage, since loss-of-function alleles for hkb or en eliminate expression of several markers that characterize these cells. hkb appears to act at a step subsequent to NB delamination, since NB 7-3 is detectable in a strain containing a severe hkb allele.