Drosophila proboscipedia (pb; HoxA2/B2 homolog) mutants develop distal legs in place of their adult labial mouthparts. Here we examine how pb homeotic function distinguishes the developmental programs of labium and leg. We find that the labial-to-leg transformation in pb mutants occurs progressively over a 2-day period in mid-development, as viewed with identity markers such as dachshund (dac). This transformation requires hedgehog activity, and involves a morphogenetic reorganization of the labial imaginal disc. Our results implicate pb function in modulating global axial organization. Pb protein acts in at least two ways. First, Pb cell autonomously regulates the expression of target genes such as dac. Second, Pb acts in opposition to the organizing action of hedgehog. This latter action is cell-autonomous, but has a nonautonomous effect on labial structure, via the negative regulation of wingless/dWnt and decapentaplegic/TGF-beta. This opposition of Pb to hedgehog target expression appears to occur at the level of the conserved transcription factor cubitus interruptus/Gli that mediates hedgehog signaling activity. These results extend selector function to primary steps of tissue patterning, and lead us to suggest the notion of a homeotic organizer.