Lethal alleles of orthodenticle (= otd) cause abnormalities in the embryonic head that reflect an early role in anterior pattern formation. In addition, otd activity is required for the development of the larval and adult epidermis. Clonal analysis of both viable and lethal alleles shows that the adult requirement for otd is restricted to medial regions of certain discs. When otd activity is reduced or removed, some medial precursor cells produce bristles and cuticle characteristic of more lateral structures. Similar medial defects are observed in the larval epidermis of embryos homozygous for lethal otd alleles. Antibodies to otd recognize a nuclear protein found at high levels in the medial region of the eye antennal discs, the leg discs, the genital discs and along the ventral midline of the ventral epidermis of the embryo. These results suggest that the otd gene product is required to specify medial cell fates in both the larval and adult epidermis.