NF-X1 is a novel cytokine-inducible transcription factor that has been implicated in the control of immune responses in humans, presumably by regulating expression of class II major histocompatibility genes. Here we report the cloning and genetic characterization of the first reported NF-X1 homolog, which is encoded by the Drosophila melanogaster shuttle craft (stc) gene. The deduced sequence of the fly and human proteins defines a new family of molecules distinguished by a novel cysteine-rich DNA-binding motif (consisting of seven copies of the consensus sequence Cx3Cx3LxCGx0-5HxCx3CHxGxCx2Cx7-9CxC). We have identified and begun a phenotypic characterization of mutations in the stc gene. stc mutants die at the end of embryogenesis, when they appear to be incapable of coordinating the typical peristaltic contraction waves normally required for embryos to hatch into feeding first instar larvae. Preliminary evidence indicates that the resulting lethality of this behavioral defect is accompanied by subtle morphological abnormalities in the central nervous system, where in wild-type embryos, STC protein is normally localized in the nuclei of repeated cell clusters within each neuromere and brain lobe. Thus, the NF-X1 homolog encoded by the Drosophila stc gene defines a new family of putative transcription factors and plays an essential role in the completion of embryonic development. This study presents the first in vivo genetic analysis of a member of this new protein family.