Pig-1 and Sgs-4 are a pair of closely linked and divergently transcribed Drosophila melanogaster genes, which are both expressed in larval salivary glands but at different times during development. While Sgs-4 is expressed at high levels only at the end of the third instar, Pig-1 exhibits a major peak of expression during late second and early third instar. Thus, Pig-1 expression declines as Sgs-4 expression is induced. In this paper, we show that three adjacent elements located within the short region between these genes can account for the switch from Pig-1 to Sgs-4 expression. A 170-bp segment acts as an enhancer to direct Sgs-4 expression in late-third-instar salivary glands. A 64-bp sequence located just upstream from the enhancer can modify its temporal specificity so that it works throughout the third instar. Expression induced at mid-third instar by a combination of these two elements can be repressed by a negative regulatory sequence located still further upstream. We present evidence suggesting that the changing interactions between these regulatory elements and the Sgs-4 and Pig-1 promoters lead to the correct pattern of expression of the two genes.