The Drosophila Extramacrochaetae protein antagonizes the proneural function of the Achaete and Scute proteins in the generation of the adult fly sensory organs. Extra-macrochaetae sequesters these basic-region-helix-loop-helix transcription factors as heterodimers inefficient for binding to DNA. We show that, during embryonic development, the extramacrochaetae gene is expressed in complex patterns that comprise derivatives of the three embryonic layers. Expression of extramacrochaetae often precedes and accompanies morphogenetic movements. It also occurs at regions of specialized cell-cell contact and/or cell recognition, like the epidermal part of the muscle attachment sites and the differentiating CNS. The insufficiency of extramacrochaetae affects most tissues where it is expressed. The defects suggest faulty specification of different cell types and result in impairment of processes as diverse as cell proliferation and commitment, cell adhesion and cell recognition. If Extramacrochaetae participates in cell specification by dimerizing with basic-region-helix-loop-helix proteins, the variety of defects and tissues affected by the insufficiency of extramacrochaetae suggests that helix-loop-helix proteins are involved in many embryonic developmental processes.