We have examined the mechanisms underlying the development of the olfactory sense organs on the third segment of the antenna of Drosophila. Our studies suggest that a novel developmental strategy is employed. Specification of the founder or precursor cell is not governed by the genes of the achaete-scute complex. Another basic helix-loop-helix encoding gene, atonal, is essential for determination of only a subset of the sensilla types--the sensilla coeloconica. Therefore, we predict the existence of additional proneural genes for the selection of sensilla trichoidea and sensilla basiconica. The choice of a founder cell from the presumed proneural domain is regulated by Notch activity. Soon after delamination of the founder cell, two to three additional neighboring cells also take on a sensory fate and these cells together form a presensillum cluster. The selection of neighbors does not occur when endocytosis is blocked using a temperature sensitive allele of shibire, thus suggesting that cell-cell communication is required for this step. The cells of the cluster divide once before terminal differentiation which is influenced by Notch activity. The final cell number within each sensillum is controlled by programmed cell death.