The erect wing locus of the fruit fly Drosophila melanogaster encodes a protein, EWG, that shares extensive homology with the P3A2 DNA binding protein of sea urchin and a recently identified mammalian transcription factor. Loss-of-function erect wing alleles result in embryonic lethality. Viable alleles of erect wing cause severe abnormalities of the indirect flight muscles. We have analyzed the spatial pattern of erect wing expression in the developing indirect flight muscles during postembryonic development. EWG is detected, 10 hours after puparium formation, in myoblasts that will form the indirect flight muscles. The early events of muscle development are normal in ewg mutants. However, a few hours after the onset of erect wing expression in myoblasts, defects are seen in the developing indirect flight muscles which subsequently degenerate. We present results that show that the normal development of the indirect flight muscles requires erect wing expression in the progenitor myoblasts themselves. Finally, we examine the role of target muscles in the arborization of motor axons by studying the developing innervation to the flight muscle in erect wing mutants. Our study demonstrates, for the first time, a role for a regulatory gene expressed in imaginal myoblasts in Drosophila.