During embryonic development of the Drosophila brain, the Hox gene labial is required for the regionalized specification of the tritocerebral neuromere. In order to gain further insight into the mechanisms of Hox gene action in the CNS, we have studied the molecular and genetic basis of cross-regulatory interactions between labial and other more posterior Hox genes using the GAL4/UAS system for targeted misexpression. Misexpression of posterior Hox genes in the embryonic neuroectoderm results in a labial loss-of function phenotype and a corresponding lack of Labial protein expression in the tritocerebrum. This is due to repression of labial gene transcription in the embryonic brain. Enhancer analysis suggests that this transcriptional repression operates on a 3.65 kb brain-specific labial-enhancer element. A functional analysis of Antennapedia and Ultrabithorax protein domains shows that the transcriptional repression of labial requires homeodomain-DNA interactions but is not dependent on a functional hexapeptide. The repressive activity of a Hox protein on labial expression in the tritocerebrum can, however, be abolished by concomitant misexpression of a Hox protein and the cofactors Homothorax and nuclear-targeted Extradenticle. Taken together, these results provide novel and detailed insight into the cross-regulatory interactions of Hox genes in embryonic brain development and suggest that specification of tritocerebral neuronal identity requires equilibrated levels of a Hox protein and Hth and n-Exd cofactors.