The Drosophila genes Eip28/29 and Eip40 are expressed in Kc cells and are rapidly induced by the steroid hormone ecdysone. The molecular basis for Eip28/29's regulation in those cells has been studied in some detail. To determine how this regulation relates to normal development, we have examined the expression of both genes throughout Drosophila development, with special attention to Eip28/29 and the final larval instar. Eip28/29 expression is complex; there are tissues in which it is never expressed, others in which it is continuously expressed at a low level and tissues in which its expression is regulated without obvious relationship to endocrine events. However high-level Eip28/29 expression always correlates with the presence of ecdysone and there is good evidence that Eip28/29 is directly regulated by the hormone in some tissues and at some stages. Most striking are the induction of Eip28/29 transcripts in numerous tissues at the last larval molt, their induction in the epidermis at the time of the 'late 3rd transition', their extinction in the same tissue by the premetamorphic ecdysone peak, and their induction by that peak in the lymph gland, hemocytes and proventriculus. These contrasting regulatory behaviors provide a well-defined model for studying the developmental specificity of steroid responses. Eip40 appears to be ecdysone-inducible only in the lymph gland and there only at the premetamorphic peak. The similarities been Eip28/29 and Eip40 regulation in the lymph gland and Kc cells support the idea that Kc cells are derived from a hematopoietic ancestor.