The midline glial cells are required for correct formation of the axonal pattern in the embryonic ventral nerve cord of Drosophila. Initially, six midline cells form an equivalence group with the capacity to develop as glial cells. By the end of embryonic development three to four cells are singled out as midline glial cells. Midline glia development occurs in two steps, both of which depend on the activation of the Drosophila EGF-receptor homolog and subsequent ras1/raf-mediated signal transduction. Nuclear targets of this signalling cascade are the ETS domain transcription factors pointedP2 and yan. In the midline glia pointedP2 in turn activates the transcription of argos, which encodes a diffusible negative regulator of EGF-receptor signalling.