The CNS consists of a diverse array of motorneurons, interneurons, and glia. We are interested in how transcription factors and signaling pathways interact in regulatory circuits to control cell fate and differentiation during development. The Drosophila CNS midline cells consist of 22 cells per segment including glia, interneurons, motorneurons, and neurosecretory cells. We identified and analyzed the expression of 286 genes expressed in midline cells, and are now utilizing this information to understand how midline neurons acquire their distinct identities. Despite the small number of embryonic midline cells, the origins of midline neurons and glia remained relatively unknown. We used a combination of single-cell gene expression mapping and time-lapse imaging to identify individual midline precursor (MP) cells, their locations, movements, and stereotyped patterns of division. This information was then utilized to reveal multiple roles of lethal of scute [l(1)sc] in midline neuronal cell development. Midline precursors (MPs) divide once to generate 2 neurons, and MP3 divides asymmetrically to yield two different neurons, H-cell and H-cell sib. Notch signaling directs the fates of the glutamatergic H-cell sib. We demonstrated that l(1)sc plays an essential role in the development of the dopaminergic H-cell. l(1)sc is expressed in MP3, and both daughter neurons (H-cell and H-cell sib) after birth. However, L(1)sc protein soon becomes asymmetrically localized in H-cell. Mutant and misexpression studies indicated that l(1)sc is required for expression of genes involved in dopamine biosynthesis and transport, and neurotransmitter receptor genes. There are 4 additional transcription factors (BarH1, Scute, SoxNeuro, and Tailup) that are expressed in H-cell, and genetic experiments indicated that these control subsets of H-cell-expressed genes. Thus, l(1)sc is required for most H-cell-specific gene expression, and additional transcription factors function combinatorially to carry-out this regulatory program. Using a combination of genetics and genomics we have defined a series of molecular events that describe neuronal differentiation from precursor division to acquisition of differentiated properties.