The region specific homeotic gene spalt (sal) of Drosophila melanogaster promotes the specification of terminal pattern elements as opposed to segments in the trunk. Our results show that the previously reported sal transcription unit was misidentified. Based on P-element mediated germ line transformation and DNA sequence analysis of sal mutant alleles, we identified the transcription unit that carries sal function. sal is located close to the misidentified transcription unit, and it is expressed in similar temporal and spatial patterns during embryogenesis. The sal gene encodes a zinc finger protein of novel structure composed of three widely spaced 'double zinc finger' motifs of internally conserved sequences and a single zinc finger motif of different sequence. Antibodies produced against the sal protein show that sal is first expressed at the blastoderm stage and later in restricted areas of the embryonic nervous system as well as in the developing trachea. The antibodies detect sal homologous proteins in corresponding spatial and temporal patterns in the embryos of related insect species. Sequence analysis of the sal gene of Drosophila virilis, a species which is phylogenetically separated by approximately 60 million years, suggests that the sal function is conserved during evolution, consistent with its proposed role in head formation during arthropod evolution.