We report the isolation and characterization of a putative angiotensin converting enzyme (ACE) in Drosophila, called Race. General interest in mammalian ACE stems from its association with high blood pressure; ACE has also been implicated in a variety of other physiological processes including the processing of neuropeptides and gut peristalsis. Mammalian ACE is a membrane associated zinc binding protease that converts angiotensin I (A I) into angiotensin II (A II). A II functions as a potent vasoconstrictor by triggering a G-coupled receptor system in the smooth muscles that line blood vessels. Drosophila Race is composed of 615 amino acid residues, and shares extensive sequence identity with mammalian ACE over its entire length (over 42% overall identity and greater than 60% similarity). Evidence is presented that Race might correspond to a target of the homeobox regulatory gene, zerknullt (zen). Soon after zen expression is restricted to the dorsal-most regions of the embryonic ectoderm, Race is activated in a coincident pattern and becomes associated with the amnioserosa during germ band elongation, shortening and heart morphogenesis. After germ band elongation, Race is also expressed in both the anterior and posterior midgut, where it persists throughout embryogenesis. Race expression is lost from the dorsal ectoderm in either zen- or dpp- mutants, although gut expression is unaffected. P-transformation assays and genetic complementation tests suggest that Race corresponds to a previously characterized lethal complementation group, 1(2)34Eb. Mutants die during larval/pupal development, and transheterozygotes for two different lethal alleles exhibit male sterility. We propose that Race might play a role in the contractions of the heart, gut, or testes and also suggest that Hox genes might be important for coordinating both developmental and physiological processes.