Drosophila has been developed recently as a model system to investigate the molecular and neural mechanisms underlying responses to drugs of abuse. Genetic screens for mutants with altered drug-induced behaviors thus provide an unbiased approach to define novel molecules involved in the process. We identified mutations in the Drosophila LIM-only (LMO) gene, encoding a regulator of LIM-homeodomain proteins, in a genetic screen for mutants with altered cocaine sensitivity. Reduced Lmo function increases behavioral responses to cocaine, while Lmo overexpression causes the opposite effect, reduced cocaine responsiveness. Expression of Lmo in the principal Drosophila circadian pacemaker cells, the PDF-expressing ventral lateral neurons (LN(v)s), is sufficient to confer normal cocaine sensitivity. Consistent with a role for Lmo in LN(v)function,Lmomutants also show defects in circadian rhythms of behavior. However, the role for LN(v)s in modulating cocaine responses is separable from their role as pacemaker neurons: ablation or functional silencing of the LN(v)s reduces cocaine sensitivity, while loss of the principal circadian neurotransmitter PDF has no effect. Together, these results reveal a novel role for Lmo in modulating acute cocaine sensitivity and circadian locomotor rhythmicity, and add to growing evidence that these behaviors are regulated by shared molecular mechanisms. The finding that the degree of cocaine responsiveness is controlled by the Drosophila pacemaker neurons provides a neuroanatomical basis for this overlap. We propose that Lmo controls the responsiveness of LN(v)s to cocaine, which in turn regulate the flies' behavioral sensitivity to the drug.