Pattern formation in Drosophila involves a cascade of maternal and zygotic factors which are spatially restricted in the blastoderm embryo. Here we show that the Drosophila gene huckebein (hkb), a member of the gap gene class of segmentation genes, is not only required for suppression of segmentation in the terminal regions of the embryo but also to spatially restrict germ layer formation at the beginning of gastrulation. hkb encodes a Sp1/egr-like zinc finger protein, likely to be a transcription factor. Its absence in hkb mutants causes the ectodermal and mesodermal primordia to expand at the expense of endoderm anlagen, which are completely absent in null alleles of hkb. Conversely, ectopic expression of hkb inhibits the formation of the major gastrulation fold which gives rise to the mesoderm and prevents normal segmentation in the ectoderm of the trunk region.