A Drosophila gene, Dwhn (Drosophila whn-like), encoding a putative transcriptional regulator with a DNA binding domain similar to that of mouse Winged-helix nude (Whn) was cloned. Analyses of the phenotypes produced by a hypomorphic mutation and transgene expression suggested a role in cell fate decision during the differentiation of the compound eye, wing veins and bristles. During embryonic development, Dwhn expression started ubiquitously followed by more restricted expression in striking contrast to the expression patterns of other Drosophila forkhead (fkh) family genes whose local expression correlate well to their roles as local homeotic genes. This broad expression may correspond to the multiple defects in embryos homozygous for strong alleles, such as defects in the formation of central and peripheral nervous systems, germ band retraction, head involution, and dorsal closure. The DNA binding specificity of Dwhn differed from that of Whn despite the strong sequence conservation in the DNA binding domain. Dwhn is the first invertebrate Whn-like transcriptional regulator, and should provide insights into the basic functions and evolution of the whn family genes.