DSP1 is an HMG-box containing protein of Drosophila melanogaster which was first identified as a co-repressor of the Dorsal protein. Recently, the analysis of the structure of the gene has led us to propose that DSP1 is the Drosophila equivalent of the ubiquitous vertebrate HMG 1/2 proteins. In the present paper, the patterns of expression of DSP1 protein and RNA in adult flies and during development are reported. In the adults DSP1 protein is located in nurse cells of ovaries and in brain. During eggs development uniform expression of DSP1 protein persists until the end of germband retraction. At later stages, expression is restricted to the ventral nerve chord and brain. Using P-element mutagenesis, we have isolated a mutant deficient in DSP1 functions. Genetic studies of this mutant show that DSP1 protein is essential for the growth and the development of Drosophila. In addition to be a co-repressor of the transcriptional activator Dorsal our results provide compelling evidence that DSP1 is a regulator involved in several pathways necessary for the development of the fly.