The chromosomal passenger protein complex has emerged as a key player in mitosis, with important roles in chromatin modifications, kinetochore-microtubule interactions, chromosome bi-orientation and stability of the bipolar spindle, mitotic checkpoint function, assembly of the central spindle and cytokinesis. The inner centromere protein (Incenp; a subunit of this complex) is thought to regulate the Aurora B kinase and target it to its substrates. To explore the roles of the passenger complex in a developing multicellular organism, we have performed a genetic screen looking for new alleles and interactors of Drosophila Incenp. We have isolated a new null allele of Incenp that has allowed us for the first time to study the functions of the chromosomal passengers during development. Homozygous incenpEC3747 embryos show absence of phosphorylation of histone H3 in mitosis, failure of cytokinesis and polyploidy, and defects in peripheral nervous system development. These defects are consistent with depletion of Aurora B kinase activity. In addition, the segregation of the cell-fate determinant Prospero in asymmetric neuroblast division is abnormal, suggesting a role for the chromosomal passenger complex in the regulation of this process.