Developmental fields are subdivided into lineage-restricted cell populations, known as compartments. In the eye imaginal disc of Drosophila, dorso-ventral (DV) lineage restriction is the primary event, whereas antero-posterior compartment boundary is the first lineage restriction in other imaginal discs. The Iroquois complex (Iro-C) genes function as dorsal selectors and repress the default, ventral, identity in the eye-head primordium. In Iro-C mutant clones, change of the dorsal identity to default ventral fate leads to generation of ectopic DV boundary, which results in dorsal eye enlargement, and duplication of ventral appendages like antenna and maxillary palp. Similar phenotypes were observed in heads with defective proventriculus (dve) mutant clones. Here, we show that the homeobox gene dve is a downstream effector of Iro-C in the dorsal head capsule (vertex) specification and represses the ventral (antennal) identity. Two homeodomain proteins Distal-less (Dll) and Homothorax (Hth) are known to be determinants of the antennal identity. Ectopic antenna formation in heads with dve mutant clones was associated with ectopic Dll expression and endogenous Hth expression in the vertex region. Interestingly, dve Dll double mutant clones could also induce ectopic antennae lacking the distal structures, suggesting that the Dve activity is crucial for repressing inappropriate antenna-forming potential in the vertex region. Our results clearly indicate that not only the activation of effector genes to execute developmental program but also the repression of inappropriate program is crucial for establishment of the organ identity.