The g/ass gene encodes a zinc finger protein required for normal photoreceptor cell development in Drosophila. We show that glass transcripts are present in the third-instar eye-imaginal disc starting in the morphogenetic furrow and extending to the posterior margin of the disc; g/ass protein is detected in the nuclei of all cells in this region. We also show that glass encodes a site-specific DNA-binding protein. A 27-bp g/ass-binding site can confer glass-dependent expression on a reporter gene in developing photoreceptor cells, the particular subset of g/ass-expressing cells known to require g/ass function. This specificity may represent a regulation of glass protein activity after cells are recruited to the photoreceptor cell fate. [Key Words: glass; During the development of multicellular organisms, the fate of a cell is often determined by the influence of neighboring cells or tissues. The molecular mechanisms by which such inductive signals cause changes in the genetic program of the responding cell remain largely unknown. In the early stages of the response, signals from the cell surface must lead to modifications in the activity of one or more pre-existing transcription factors, which then set in motion the appropriate cascade of gene activation.Post-translational activation of transcription factors has been demonstrated in a number of cases, including steroid hormone receptors (Glineur et al. 1990), the yeast heat shock response factor (Sorger and Pelham 1988), and the mammalian factor AP-1 (Angel et al. 1987;Lee et al. 1987). The activation of transcription factors in response to inductive signals during development has proved more difficult to demonstrate, largely because the critical transcription factors have not been identified. Cell identities in the developing eye of Drosophila are determined by induction, and mutations in several genes that encode putative transcription factors have been shown to disrupt normal eye development (for reviews, see Tomlinson 1988;Banerjee and Zipursky 1990). Here, we show that one of these genes, glass, encodes a site-spe1present address: Molecular Biology Section, Department of Biological Sciences, University of Southern California, University Park, Los Angeles, California 90089 USA.cific DNA-binding protein and that glass function, in its broadest sense, is regulated at the protein level.The glass gene is required for the normal development of photoreceptor cells in all three organs in which they occur: the adult compound eye (Johannsen 1924;Garen and Kankel 1983), the adult simple eyes or ocelli (Stark et al. 1984;Moses et al. 1989;Stark and Sapp 1989), and the larval photoreceptor or Bolwig's organ (Moses et al. 1989). In the retina, we demonstrated that only the photoreceptor cells have a cell-autonomous requirement for glass function (Moses et al. 1989). Developing glass mutant photoreceptor cells in the eye-imaginal disc express neural antigens and extend axons; however, they show early morphological defects, fail to express the photoreceptor cell-specific...