E proteins are a special class of basic helix-loop-helix (bHLH) proteins that 
heterodimerize with many bHLH activators to regulate developmental decisions, 
such as myogenesis and neurogenesis. Daughterless (Da) is the sole E protein in 
Drosophila and is ubiquitously expressed. We have characterized two 
transcription activation domains (TADs) in Da, called activation domain 1 (AD1) 
and loop-helix (LH), and have evaluated their roles in promoting peripheral 
neurogenesis. In this context, Da heterodimerizes with proneural proteins, such 
as Scute (Sc), which is dynamically expressed and also contributes a TAD. We 
found that either one of the Da TADs in the Da/Sc complex is sufficient to 
promote neurogenesis, whereas the Sc TAD is incapable of doing so. Besides its 
transcriptional activation role, the Da AD1 domain serves as an interaction 
platform for E(spl) proteins, bHLH-Orange family repressors which antagonize 
Da/Sc function. We show that the E(spl) Orange domain is needed for this 
interaction and strongly contributes to the antiproneural activity of E(spl) 
proteins. We present a mechanistic model on the interplay of these bHLH factors 
in the context of neural fate assignment.