In Drosophila, Engrailed is a nuclear regulatory protein with essential roles in embryonic segmentation and in normal development of posterior compartments. One of its regulatory targets appears to be polyhomeotic (ph), a Polycomb group gene. We observed, by immunostaining, that Engrailed protein binds to the site of the polyhomeotic locus in region 2D of polytene chromosomes. The same analysis carried out on a transgenic line containing one copy of a P(ph-lacZ) construct shows an additional Engrailed-binding site at the location of the insert. In vivo, polyhomeotic depends on engrailed function in germ-band-elongated embryos, when engrailed and polyhomeotic genes are expressed in similar patterns. By in vitro immunoprecipitations and gel shift assays, we identified two classes of high affinity Engrailed-binding sites upstream of each of the two polyhomeotic transcription units. DNA fragments containing these sites were also immunoprecipitated from embryonic UV crosslinked chromatin in presence of anti-Engrailed antibody. These results suggest that polyhomeotic activation in germ-band-elongated embryos could be mediated by Engrailed-binding to these sites.