In wild-type embryos of Drosophila melanogaster, the formation of differentiated larval muscles is preceded by the segregation of small numbers of progenitor or founder cells in the embryonic mesoderm. The founder cells, characterised by the expression of genes encoding putative transcription factors such as S59 or vestigial, fuse with neighbouring myoblasts to form syncytial precursors of individual muscles. Founder cell segregation is deranged in embryos mutant for any of the neurogenic genes: enlarged clusters of cells expressing S59 or vestigial are detected at the sites where small numbers of founder cells segregate in the wild type. In addition, muscle differentiation is deranged in such embryos in a way that appears to be closely linked to the extent of epidermal disruption caused by the neurogenic phenotype: myoblast fusion is limited to regions of the mesoderm beneath the residual epidermis left by the hyperplasia of the nervous system, and late expression of S59 and vestigial is lost from mesoderm not lying within the margins of the residual epidermis. Thus neurogenic gene functions appear to be required both for the normal segregation of founder cells and for muscle differentiation. It is not clear whether either of these requirements reflects an essential function for any or all of the neurogenic genes within the mesoderm itself.