The loss of cut activity results in a change in neural identity in the peripheral nervous system so that the neurons and support cells of external sensory (es) organs are transformed into those of internal chordotonal (ch) organs, cut encodes a large nuclear homeo domain protein (Cut) that is expressed in the differentiated cells of es organs and their precursors but not in the cells of ch organs. We now analyze the effects of ectopic Cut expression in transformant lines of flies containing the Cut-coding sequences under inducible regulatory control. We demonstrate that ubiquitous Cut expression in embryos results specifically in the morphologic and antigenic transformation of ch organs into es organs. This effect appears to involve positive autoregulation of Cut expression. We conclude that Cut is not only necessary but sufficient for the specification of es organ identify in sensory organ precursor cells and their progeny. The specificity of Cut function to sensory organ cells involves the proneural loci daughterless and the achaete-scute complex.