ABSTRACT The even-skipped (eve) pair-rule gene plays a key role in the establishment of the anterior-posterior segmental pattern of the Drosophila embryo. The continuously changing pattern of eve expression can be resolved into two phases. Early expression consists of seven broad stripes in the blastoderm embryo, while late expression, which occurs after cellularization, consists of narrow stripes with sharp anterior borders that coincide with the odd-numbered parasegment boundaries. Previous studies have shown that these two phases are controlled by separate classes of cis elements in the eve promoter. Early stripes are expressed by multiple stripe-specific elements under the control of maternal-effect genes and gap genes, while late stripes are expressed by a single regulatory element, the ‘late element’, under the control of pair-rule genes including eve itself. We report here that paired (prd), a pair-rule gene which had been considered to be below eve in the regulatory hierarchy of pair-rule genes, in fact plays a critical role in the regulation of late eve expression. Transgenic analysis shows that this regulation is largely mediated by an evolutionarily conserved sequence within the late element termed PTE (Paired Target Element). In vitro analysis shows that the Prd protein binds strongly to this sequence. Interestingly, PTE contains juxtaposed binding sites for the two DNAbinding domains of the Prd protein, the paired domain and the homeodomain. Mutagenesis of either binding site leads to significant reduction in the activity of the late element, indicating that both DNA-binding domains in the Paired protein are required for regulation.