An odd family gene drumstick (drm) encodes a zinc finger protein, and is necessary for the development of the small intestine, an anterior domain of the ectodermal hindgut of Drosophila melanogaster. However, mechanisms that specify the small intestine, as well as gene regulatory pathways leading to transcriptional activation of drm, are still unclear. We found that drm is expressed in two different tissues abutting the anterior end of the hindgut primordium, that is, the posterior-most region of the midgut (endoderm) and basal portion of the Malpighian tubules. A small intestine marker gene, unpaired (upd), begins to be expressed at the anterior-most region of the hindgut primordium that abuts the basal portion of Malpighian tubules, and the upd-positive region expands, resulting in a short tube during stages 11-13. The small intestine develops in both of the mutant embryos, serpent (srp) and Krüppel (Kr), that lack the drm-positive midgut or Malpighian tubules, respectively, while it fails to develop in the Kr srp double-mutant embryos that lack both of the drm-positive tissues. These results demonstrate that drm expressed in the abutting tissues cell-non-autonomously induces development of the small intestine in the hindgut primordium, probably by deploying some extracellular signaling factor. drm expression in the posterior gut region disappears and the small intestine fails to form in tailless (tll) mutant embryos, whereas over-expression of tll causes expansion of drm expression throughout the midgut, inducing a longer small intestine. These results indicate that drm is activated under the control of tll and triggers development of the small intestine cell-non-autonomously through some extracellular signaling.