We report that the region-specific homeotic gene spalt affects the Drosophila tracheal system at two different stages of embryonic development. Both lack-of-function and gain-of-function experiments show that blastodermal spalt activity restricts tracheal development to 10 bilaterally positioned pairs of tracheal placodes in the trunk region by repressing placode formation in parasegments 2, 3 and 14. The results suggest that the activity of the zinc-finger type transcription factor encoded by spalt suppresses the molecular pathway that establishes tracheal development. spalt function is also necessary for the directed migration of the dorsal trunk cells, a distinct subset of tracheal cells. This process is a prerequisite for the formation of the dorsal trunk generated by fusion of adjacent tracheal metameres into a common tubular structure. The directed cell migration, in which spalt gene function participates, seems to be independent of branch fusion and general tracheal cell migration processes.