lilliputian (lilli), the sole Drosophila member of the FMR2/AF4 (Fragile X Mental Retardation/Acute Lymphoblastic Leukemia) family of transcription factors, is widely expressed with roles in segmentation, cellularization, and gastrulation during early embryogenesis with additional distinct roles at later stages of embryonic and postembryonic development. We identified lilli in a genetic screen based on the suppression of a lethal phenotype that is associated with ectopic expression of the transcription factor encoded by the segmentation gene runt in the blastoderm embryo. In contrast to other factors identified by this screen, lilli appears to have no role in mediating either the establishment or maintenance of engrailed (en) repression by Runt. Instead, we find that Lilli plays a critical role in the Runt-dependent activation of the pair-rule segmentation gene fushi-tarazu (ftz). The requirement for lilli is distinct from and temporally precedes the Runt-dependent activation of ftz that is mediated by the orphan nuclear receptor protein Ftz-F1. We further describe a role for lilli in the activation of Sex-lethal (Sxl), an early target of Runt in the sex determination pathway. However, lilli is not required for all targets that are activated by Runt and appears to have no role in activation of sloppy paired (slp1). Based on these results we suggest that Lilli plays an architectural role in facilitating transcriptional activation that depends both on the target gene and the developmental context.