Vestigial mutants are associated with imaginal disc cell death which results in the deletion of adult wing and haltere structures. The vestigial locus has previously been cloned, and mutational lesions associated with a number of vg alleles were mapped within a 19 kb DNA region defined as essential for vg function. Herein we report the identification and characterization of a developmentally regulated 3.8 kb vg transcript which is spliced from exons distributed throughout the essential interval defined above. All the characterized classical alleles have predictable effects on this transcription unit, and the severity of this effect is directly proportional to the severity of the wing phenotype. A repetitive domain within this transcription unit was identified and may serve as a tag to isolate other genes with functions related to vg. We also report an exceptional vg allele (vg83b27) that produces an extreme wing and haltere phenotype, but which defines a second vg complementation unit. This allele is associated with a 4 kb deletion entirely within a 4.5 kb vg intron as defined by the 3.8 kb transcription unit. Molecular and genetic evidence indicates that the vg83b27 mutation has a functional 3.8 kb transcription unit, thus accounting for its ability to complement classical alleles. The results indicate that sequences within a vg intron are essential for normal wing and haltere development.