Micro-exons are exons of very small size (usually 3-30 nts). Some micro-exons are alternatively spliced. Their functions, regulation and evolution are largely unknown. Here, we present an example of an alternatively spliced 3 bp micro-exon (micro-Ex8) in the homothorax (hth) gene in Drosophila. Hth is involved in many developmental processes. It contains a MH domain and a TALE-class homeodomain (HD). It binds to another homeodomain Exd via its MH domain to promote the nuclear import of the Hth-Exd complex and serve as a cofactor for Hox proteins. The MH and HD domains in Hth as well as the HTh-Exd interaction are highly conserved in evolution. The alternatively spliced micro-exon lies between the exons encoding the MH and HD domains. We provide clear proof that the micro-Ex8 is produced by alternative splicing from a 48 bp full-length exon 8 (FL-Ex8) and the micro-Ex8 is the first three nt is FL-Ex8. We found that the micro-Ex8 is the ancient form and the 3 + 48 organization of alternatively spliced overlapping exons only emerged in the Schizophora group of Diptera and is absolutely conserved in this group. We then used several strategies to test the in vivo function of the two types of isoforms and found that the micro-Ex8 and FL-Ex8 isoforms have largely overlapping functions but also have non-redundant functions that are tissue-specific, which supports their strong evolutionary conservation. Since the different combinations of protein interaction of Hth with Exd and/or Hox can have different DNA target specificity, our finding of alternatively spliced isoforms adds to the spectrum of structural and functional diversity under developmental regulation.