The development of the Drosophila mesoderm is initiated by the basic helix-loop-helix transcription factor twist. We identified a gene encoding a putative transcription factor, mes2, in a screen for essential mesoderm-expressed genes that function downstream of twist. Mes2 protein belongs to a family of 48 Drosophila proteins containing MADF domains. MADF domains exist in worms, flies, and fish. Mes2 is a nuclear protein first produced in trunk and head mesoderm during late gastrulation. At later embryonic stages, mes2 is expressed in glia of the central and peripheral nervous systems, and in tissues derived from the head mesoderm. We have identified a null mutation of mes2 that leads to developmental arrest in first instar larvae. Increased production of Mes2 in multiple embryonic and larval tissues almost always causes lethality. The ubiquitous or epidermal misexpression of mes2 in the embryo causes a dramatic loss of epidermal integrity resulting in the failure of dorsal closure. Our data show that the precise regulation of mes2 expression is critical for normal development in Drosophila and implicate Mes2 in the regulation of essential target genes.