Recent experiments have shown that the genomes of organisms such as worm, fly, human, and mouse encode hundreds of microRNA genes. Many of these microRNAs are thought to regulate the translational expression of other genes by binding to partially complementary sites in messenger RNAs. Phenotypic and expression analysis suggests an important role of microRNAs during development. Therefore, it is of fundamental importance to identify microRNA targets. However, no experimental or computational high-throughput method for target site identification in animals has been published yet. Our main result is a new computational method that is designed to identify microRNA target sites. This method recovers with high specificity known microRNA target sites that have previously been defined experimentally. Based on these results, we present a simple model for the mechanism of microRNA target site recognition. Our model incorporates both kinetic and thermodynamic components of target recognition. When we applied our method to a set of 74 Drosophila melanogaster microRNAs, searching 3'UTR sequences of a predefined set of fly mRNAs for target sites which were evolutionary conserved between D. melanogaster and Drosophila pseudoobscura, we found that many key developmental body patterning genes such as hairy and fushi-tarazu are likely to be translationally regulated by microRNAs.