The Drosophila ventral midline cells generate a discrete set of CNS li
neages, required for proper patterning of the ventral ectoderm. Here w
e provide the first evidence that the CNS midline cells also exert ind
uctive effects on the mesoderm, Mesodermal progenitors adjacent to the
midline progenitor cells give rise to ventral somatic mucles and a pa
ir of unique cells that come to lie dorsomedially on top of the ventra
l nerve cord, the so-called DM cells. Cell ablation as well as cell tr
ansplantation experiments indicate that formation of the DM cells is i
nduced by midline progenitors in the early embryo, These results are c
orroborated by genetic analyses, Mutant single minded embryos lack the
CNS midline as well as the DM cells, Embryos mutant for any of the sp
itz group genes, which primarily express defects in the midline glial
cell lineages, show reduced formation of the DM cells. Conversely, dir
ected overexpression of secreted SPITZ by some or all CNS midline cell
s leads to the formation of additional DM cells, Furthermore we show t
hat DM cell development does not depend on the absolute concentration
of a local inductor but appears to require a graded source of an induc
ing signal. Thus, the Drosophila CNS midline cells play a central indu
ctive role in patterning the mesoderm as well as the underlying ectode
rm.