At the poles of the Drosophila embryo, cell fate is established by a pathway that begins with the activation of a membrane-associated tyrosine kinase (the torso gene product); this then leads to activation of a serine/threonine kinase (Drosophila Raf-1). Activated Raf-1 then leads, by an undefined mechanism, to the transcriptional activation of the tailless (tll) gene; the tll gene product, itself a transcription factor, subsequently regulates the expression of an array of target genes. To further define this pathway, we have utilized sequence comparison between Drosophila melanogaster and Drosophila virilis to identify conserved elements in the tll promoter region. As assessed by DNase I footprinting and promoter dissection experiments, two of these elements are potential regulatory targets of Raf-1-activated transcription factors. Sequence comparison also reveals that the unique residues in the DNA-binding domain of the tll protein, the next component in the pathway, are conserved. One of these residues, the alanine after the last cysteine in the first zinc finger, may be responsible for part of the difference between the tll protein DNA binding site and the closely related half-site of the retinoid/estrogen receptors. Consistent with the rapid turnover of the tll protein, it contains a PEST sequence (rich in proline, glutamate and aspartate, serine, and threonine) that is also conserved.