Scutoid is a classical dominant gain-of-function mutation of Drosophila, causing a loss of bristles and roughening of the compound eye. Previous genetic and molecular analyses have shown that Scutoid is associated with a chromosomal transposition resulting in a fusion of no-oceli and snail genes. How this gene fusion event leads to the defects in neurogenesis was not known until now. Here have found that snail is ectopically expressed in the eye-antennal and wing imaginal discs in Scutoid larvae, and that this expression is reduced in Scutoid revertants. We have also shown that the expressivity of Scutoid is enhanced by zeste mutations. snail and escargot encode evolutionarily conserved zinc-finger proteins involved in the development of mesoderm and limbs. Snail and Escargot proteins share a common target DNA sequence with the basic helix-loop-helix (bHLH) type proneural gene products. When expressed in the developing external sense organ precursors of the thorax and the eye, these proteins cause a loss of mechanosensory bristles in the thorax and perturbed the development of the compound eye. Such phenotypes resemble those associated with Scutoid. Furthermore, the effect of ectopic Escargot on bristle development is antagonized by coexpression of the bHLH gene asense. Thus, our results suggest that the Scutoid phenotype is due to an ectopic snail expression under the control of no-oceli enhancer, antagonizing neurogenesis through its inhibitory interaction with bHLH proteins.