The region-specific homeotic gene fork head (fkh) promotes terminal as opposed to segmental development in the Drosophila embryo. We have cloned the fkh region by chromosomal walking. P element-mediated germ-line transformation and sequence comparison of wild-type and mutant alleles identify the fkh gene within the cloned region. fkh is expressed in the early embryo in the two terminal domains that are homeotically transformed in fkh mutant embryos. The nuclear localization of the fkh protein suggests that fkh regulates the transcription of other, subordinate, genes. The fkh gene product, however, does not contain a known protein motif, such as the homeodomain or the zinc fingers, nor is it similar in sequence to any other known protein.