rhomboid (rho) belongs to a group of four genes involved in the elaboration of positional information at a ventrolateral level in the Drosophila embryo. Mutations at any of these four loci also lead to a variety of other phenotypes, including reduction in the number of stretch receptor organs (chordotonal organs) in the peripheral nervous system (PNS). We have cloned rho with the aid of a lacZ-bearing P-element inserted into the rho gene. In the early blastoderm stage, a putative rho transcript is expressed in ventrolateral strips corresponding to the domain of activity of the rho gene on the embryonic fate map. Later expression of the transcript correlates with regions of the embryo that are disrupted in rho mutants and includes a cell that may be the precursor for the missing stretch receptor organs. We hypothesize that rho acts very early in differentiation pathways to specify the identities of domains and isolated precursor cells. Sequence analysis suggests that this transcript codes for a trans-membrane protein.