ABSTRACT The neighboring homologous knirps (kni) and knirpsrelated (knrl) genes in Drosophila encode transcription factors in the steroid hormone receptor superfamily. During early embryogenesis, kni functions as a gap gene to control expression of segmentation genes within the abdominal region of the embryo. In this study, we present evidence that kni and knrl link A/P positional information in larval wing imaginal discs to morphogenesis of the second longitudinal wing vein (L2). We show that kni and knrl are expressed in similar narrow stripes corresponding to the position of the L2 primordium. The kni and knrl L2 stripes abut the anterior border of the broad central expression domain of the Dpp target gene spalt major (salm). We provide evidence that radius incompletus (ri), a well-known viable mutant lacking the L2 vein, is a regulatory mutant of the kni/knrl locus. In ri mutant wing discs, kni and knrl fail to be expressed in the L2 primordium. In addition, the positions of molecular breakpoints in the kni/knrl locus indicate that the ri function is provided by cis-acting sequences upstream of the kni transcription unit. Epistasis tests reveal that the kni/knrl locus functions downstream of spalt major (salm) and upstream of genes required to initiate vein-versusintervein differentiation. Mis-expression experiments suggest that kni and knrl expressing cells inhibit neighboring cells from becoming vein cells. Finally, kni and knrl are likely to refine the L2 position by positively auto-regulating their own expression and by providing negative feedback to repress salm expression. We propose a model in which the combined activities of kni and knrl organize development of the L2 vein in the appropriate position.