The Drosophila segmentation gene paired, whose product is homologous to the Drosophila Gooseberry and mammalian Pax3 proteins, has three general functions: proper development of the larval cuticle, survival to adulthood and male fertility. Both DNA-binding domains, the conserved N-terminal paired-domain and prd-type homeodomain, are required within the same molecule for all general paired functions, whereas a conserved His-Pro repeat located near its C terminus is a transactivation domain potentiating these functions. The C-terminal moiety of Paired includes two additional functional motifs: one, also present in Gooseberry and Pax3, is required for segmentation and cuticle development; the other, retained only in Gooseberry, is necessary for survival. The male fertility function, which cannot be replaced by Gooseberry and Pax3, is specified by the conserved N-terminal rather than the divergent C-terminal moiety of Paired. We conclude that the functional diversification of paired, gooseberry and Pax3, primarily determined by variations in their enhancers, is modified by adaptations of their coding regions as a necessary consequence of their newly acquired spatiotemporal expression.