We have investigated the development of the Drosophila neuroendocrine gland, the corpus cardiacum (CC), and identified the role of regulatory genes and signaling pathways in CC morphogenesis. CC progenitors segregate from the blastoderm as part of the anterior lip of the ventral furrow. Among the early genetic determinants expressed and required in this domain are the genes giant (gt) and sine oculis (so). During the extended germ band stage, CC progenitor cells form a paired cluster of 6-8 cells sandwiched in between the inner surface of the protocerebrum and the foregut. While flanking the protocerebrum, CC progenitors are in direct contact with the neural precursors that give rise to the pars intercerebralis, the part of the brain whose neurons later innervate the CC. At this stage, the CC progenitors turn on the homeobox gene glass (gl), which is essential for the differentiation of the CC. During germ band retraction, CC progenitors increase in number and migrate posteriorly, passing underneath the brain commissure and attaching themselves to the primordia of the corpora allata (CA). During dorsal closure, the CC and CA move around the anterior aorta to become the ring gland. Signaling pathways that shape the determination and morphogenesis of the CC are decapentaplegic (dpp) and its antagonist short gastrulation (sog), as well as hedgehog (hh) and heartless (htl; a Drosophila FGFR homolog). Sog is expressed in the midventral domain from where CC progenitors originate, and these cells are completely absent in sog mutants. Dpp and hh are expressed in the anterior visceral head mesoderm and the foregut, respectively; both of these tissues flank the CC. Loss of hh and dpp results in defects in CC proliferation and migration. Htl appears in the somatic mesoderm of the head and trunk. Although mutations of htl do not cause direct effects on the early development of the CC, the later formation of the ring gland is highly abnormal due to the absence of the aorta in these mutants. Defects in the CC are also caused by mutations that severely reduce the protocerebrum, including tailless (tll), suggesting that additional signaling events exist between brain and CC progenitors. We discuss the parallels between neuroendocrine development in Drosophila and vertebrates.