Cells in the neurectoderm of Drosophila face a choice between neural and epidermal fates. On the notum of the adult fly, neural cells differentiate sensory bristles in a precise pattern. Evidence has accumulated that the bristle pattern arises from the spatial distribution of small groups of cells, proneural clusters, from each of which a single bristle will result. One class of genes, which includes the genes of the achaete-scute complex, is responsible for the correct positioning of the proneural clusters. The cells of a proneural cluster constitute an equivalence group, each of them having the potential to become a neural cell. Only one cell, however, will adopt the primary, dominant, neural fate. This cell is selected by means of cellular interactions between the members of the group, since if the dominant cell is removed, one of the remaining, epidermal, cells will switch fates and become neural. The dominant cell therefore prevents the other cells of the group from becoming neural by a phenomenon known as lateral inhibiton. They, then, adopt the secondary, epidermal, fate. A second class of genes, including the gene shaggy and the neurogenic genes mediate this process. There is some evidence that a proneural cluster is composed of a small number of cells, suggesting a contact-based mechanism of communication. The molecular nature of the protein products of the neurogenic genes is consistent with this idea.