Segmental patterning in Drosophila relies on a cascade of transcription factors that subdivide the embryo into successively more precise domains. We have identified a missense mutation (W049) in the gene encoding the transcriptional elongation factor Spt5 (reviewed in ) which, when homozygous in the maternal germ line, leads to defects in segmental patterning of the embryo. W049 alters the C-terminal domain of Spt5 and affects its activity in vitro, impairing its abilities to confer sensitivity to the transcriptional inhibitor DRB and to stimulate transcription at limiting nucleotide concentrations. In vivo, W049 shows locus-specific effects on transcription: expression of gap genes remains wild-type, but striped patterning of the primary pair-rule genes even-skipped and runt is disrupted. even-skipped stripes are broadened in the mutant embryos indicating that Spt5 is likely to be a direct, negative regulator of this target gene. Our results suggest control of transcriptional elongation by repressors contributes to striped gene expression in the embryo. By contrast, expression of heat shock-induced proteins is reduced in the mutant embryos. These results provide genetic evidence for Spt5 function during heat shock induction and demonstrate that Spt5 acts both positively and negatively on transcription in vivo depending on context.