Neuropeptide function in the peripheral and central nervous systems has been described in mammals as well as in insects. We previously reported the cloning of the neuropeptide receptor NKD, a Drosophila melanogaster homologue of the mammalian tachykinin receptors. This receptor is expressed during Drosophila embryonic development and in the adult fly. Use of the NKD promoter region to drive beta-galactosidase expression in transgenic flies reveals a bipartite promoter organisation: the distal region controls NKD expression in neurosecretory cells of the central nervous system during late embryogenesis, whereas the proximal region is responsible for transient expression in peripheral nervous system during late embryogenesis, whereas the proximal region is responsible for transient expression in peripheral nervous system precursor cells early in development. This early NKD expression, first restricted to the sensory organ precursor cell, an atonal positive cell, is abolished in the ato1 mutant. In addition, we show that the proneural protein atonal, in association with daughterless, transactivates the NKD promoter in Schneider S2 cells via the proximal E box NKDE2. Furthermore, heterodimers of atonal and daughterless interact with this E box in gel shift assay.