C2H2 zinc-finger proteins (ZFPs) constitute the largest family of nucleic acid binding factors in higher eukaryotes. In silico analysis identified a total of 326 putative ZFP genes in the Drosophila genome, corresponding to approximately 2.3% of the annotated genes. Approximately 29% of the Drosophila ZFPs are evolutionary conserved in humans and/or Caenorhabditis elegans. In addition, approximately 28% of the ZFPs contain an N-terminal zinc-finger-associated C4DM domain (ZAD) consisting of approximately 75 amino acid residues. The ZAD is restricted to ZFPs of dipteran and closely related insects. The evolutionary restriction, an expansion of ZAD-containing ZFP genes in the Drosophila genome and their clustering at few chromosomal sites are features reminiscent of vertebrate KRAB-ZFPs. ZADs are likely to represent protein-protein interaction domains. We propose that ZAD-containing ZFP genes participate in transcriptional regulation either directly or through site-specific modification and/or regulation of chromatin.