Segmentation of the Drosophila embryo is based on a cascade of hierarchical gene interactions that is initiated by maternal morphogens; these interactions define spatially restricted domains of zygotic gene expression within the blastoderm. Although the hierarchy of the segmentation genes that subdivide the trunk is well established, the patterning of the head is less well understood. Seven head segments can be assigned on the basis of metameric patterns of segment-polarity gene expression and internal sensory organs. The domains of expression of head gap-like genes broadly overlap, with their posterior margins out of phase by one segment. Taken together with the lack of pair-rule gene expression in the head, these observations led to the suggestion that head gap genes act in a combinatorial manner, determining head segmental borders and segmental identity at the same time.We have identified a new Drosophila gene, collier (col), whose expression at the blastoderm stage is restricted to a single stripe of cells corresponding to part of the intercalary and mandibular segment primordia, possibly parasegment O. Reduction of col activity in early gastrula embryos by antisense RNA expression results in a specific lack of head structures derived from these segments. The expression of col coincides with a mitotic domain, which supports the proposal that cells in this domain undergo a concerted mitotic and differentiation program that is orchestrated at the transcriptional level. Col is an ortholog of mammalian early B-cell factor/Olfactory-1. These proteins define a new family of transcription factors that contain a helix-loop-helix dimerization motif and a new type of DNA-binding domain that is highly conserved during evolution.Here we describe Col, the first Drosophila member of a new family of transcription factors. Col may act as a "second-level regulator' of head patterning. The structural conservation of Col during evolution raises the questions of its conservation of function in head specification and its interactions with other factors conserved between insects and vertebrates.