HOMEODOMAIN proteins regulate diverse developmental processes in a wide range of organisms, yet bind in vitro to DNA sequences that are remarkably similar(1). This has raised the fundamental question of how target gene specificity is achieved in vivo. The Drosophila fushi tarazu protein (Ftz) contains a homeodomain(2) and is required for the formation of alternate segments(3). We have shown previously that a homeodomain-deleted Ftz polypeptide (Ftz Delta HD), incapable of binding DNA in vitro, could regulate endogenous ftz gene expression(4). Here we test Ftz Delta HD activities in a ftz mutant background and find that, surprisingly, Ftz Delta HD can directly regulate ftz-dependent segmentation, suggesting that it can control target gene expression through interactions with other proteins. A likely candidate is the pair-rule protein Paired (Prd). Ftz Delta HD bound directly to Prd in vitro and required Prd to repress wingless in vivo. These results emphasize the pivotal importance of protein-protein interactions in homeodomain protein function.