Hb9 is a homeodomain-containing transcription factor that acts in combination with Nkx6, Lim3, and Tail-up (Islet) to guide the stereotyped differentiation, connectivity, and function of a subset of neurons in Drosophila. The role of Hb9 in directing neuronal differentiation is well documented, but the lineage of Hb9(+) neurons is only partly characterized, its regulation is poorly understood, and most of the downstream genes through which it acts remain at large. Here, we complete the lineage tracing of all embryonic Hb9(+) neurons (to eight neuronal lineages) and provide evidence that hb9, lim3, and tail-up are coordinately regulated by a common set of upstream factors. Through the parallel use of micro-array gene expression profiling and the Dam-ID method, we searched for Hb9-regulated genes, uncovering transcription factors as the most over-represented class of genes regulated by Hb9 (and Nkx6) in the CNS. By a nearly ten-to-one ratio, Hb9 represses rather than activates transcription factors, highlighting transcriptional repression of other transcription factors as a core mechanism by which Hb9 governs neuronal determination. From the small set of genes activated by Hb9, we characterized the expression and function of two - fd59a/foxd, which encodes a transcription factor, and Nitric oxide synthase. Under standard lab conditions, both genes are dispensable for Drosophila development, but Nos appears to inhibit hyper-active behavior and fd59a appears to act in octopaminergic neurons to control egg-laying behavior. Together our data clarify the mechanisms through which Hb9 governs neuronal specification and differentiation and provide an initial characterization of the expression and function of Nos and fd59a in the Drosophila CNS.