The Drosophila dysfusion basic-helix-loop-helix-PAS transcription factor gene is expressed in specialized fusion cells that reside at the tips of migrating tracheal branches. dysfusion mutants were isolated, and genetic analysis of live embryos revealed that mutant tracheal branches migrate to close proximity but fail to recognize and adhere to each other. Misexpression of dysfusion throughout the trachea further indicated that dysfusion has the ability to both inhibit cell migration and promote ectopic tracheal fusion. Nineteen genes whose expression either increases or decreases in fusion cells during development were analyzed in dysfusion mutant embryos. dysfusion upregulates the levels of four genes, including the shotgun cell adhesion protein gene and the zona pellucida family transmembrane protein gene, CG13196. Misexpression experiments with CG13196 result in ectopic tracheal fusion events, suggesting that it also encodes a cell adhesion protein. Another target gene of dysfusion is members only, which inhibits protein nuclear export and influences tracheal fusion. dysfusion also indirectly downregulates protein levels of Trachealess, an important regulator of tracheal development. These results indicate that fusion cells undergo dynamic changes in gene expression as they switch from migratory to fusion modes and that dysfusion regulates a discrete, but important, set of these genes.