We describe the molecular characterization of the Drosophila gene tenm, a large transcription unit spanning > 110 kb of DNA. tenm encodes a large extracellular protein of 2515 amino acids related to the extracellular matrix molecule tenascin. The Tenm protein is found in seven stripes during the blastoderm stage, and each stripe overlaps with the even-skipped stripes. tenm mutants show a phenotype resembling that of odd-paired (opa), a member of the pair-rule class of segmentation genes. Thus, Tenm is the first example of a pair-rule gene product acting from outside the cell. While the Tenm protein is under the control of fushi tarazu and even-skipped, but not of opa, at least two pair-rule genes, paired (prd) and sloppy paired (slp), and all segment-polarity genes analysed to date are under the control of tenm. Our data suggest that Tenm initiates a signal transduction cascade which acts, via or in concert with opa, on downstream targets such as prd, slp, gooseberry, engrailed and wingless, leading to an opa-like phenotype.