The embryonic heart precursors of Drosophila are arranged in a repeated pattern 
of segmental units. There is growing evidence that the development of individual 
elements of this pattern depends on both mesoderm intrinsic patterning 
information and inductive signals from the ectoderm. In this study, we 
demonstrate that two homeobox genes, ladybird early and ladybird late, are 
involved in the cardiogenic pathway in Drosophila. Their expression is specific 
to a subset of cardioblast and pericardial cell precursors and is critically 
dependent on mesodermal tinman function, epidermal Wingless signaling and the 
coordinate action of neurogenic genes. Negative regulation by hedgehog is 
required to restrict ladybird expression to two out of six cardioblasts in each 
hemisegment. Overexpression of ladybird causes a hyperplasia of heart precursors 
and alters the identity of even-skipped-positive pericardial cells. Loss of 
ladybird function leads to the opposite transformation, suggesting that ladybird 
participates in the determination of heart lineages and is required to specify 
the identities of subpopulations of heart cells. We find that both early 
Wingless signaling and ladybird-dependent late Wingless signaling are required 
for proper heart formation. Thus, we propose that ladybird plays a dual role in 
cardiogenesis: (i) during the early phase, it is involved in specification of a 
segmental subset of heart precursors as a component of the cardiogenic 
tinman-cascade and (ii) during the late phase, it is needed for maintaining 
wingless activity and thereby sustaining the heart pattern process. These events 
result in a diversification of heart cell identities within each segment.