Transcriptional repression plays an essential role in many aspects of metazoan development. Drosophila hairy is a primary pair-rule gene encoding a basic helixloop-helix class transcriptional repressor that is required for proper segmentation. Previous characterization of Hairy-binding proteins has implicated two different classes of histone deacetylase as mediators of Hairy repression. Here, we present the characterization of a novel Hairy-interacting protein (dTopors) that binds specifically to the basic region of Hairy, but does not affect the ability of Hairy to bind DNA. By reducing the gene dose of dtopors, we demonstrate that it acts genetically as an antagonist of Hairy-mediated transcriptional repression. Consistent with this genetic interaction, we show that that recombinant dTopors protein possesses ubiquitin-protein isopeptide ligase activity in vitro and that dTopors mediates Hairy polyubiquitination and can lead to Hairy degradation. This work provides the first evidence that regulated proteolysis of Hairy is required for correct segmentation.Transcriptional repression is a critical regulatory mechanism for a vast number of developmental processes, including establishment of the Drosophila embryonic body plan. Drosophila segmentation occurs via sequential subdivision of the embryo, leading ultimately to the formation and determination of each body segment. This hierarchy of segmentation gene expression begins with the translation of maternally deposited transcripts (maternal genes), followed by the expression of the zygotic gap, pair-rule, and segment polarity genes. hairy is a pair-rule class gene that encodes a basic helix-loop-helix (bHLH) 1 transcriptional repressor that occupies a key position in the segmentation gene hierarchy: it is one of the first genes to show an overt reiterated periodicity that is central to the establishment of proper embryonic body plan throughout Metazoa (1-5). Hairy is one of a family of 13 structurally related bHLH transcriptional repressors that compose the HES family, which includes seven Enhancer of Split proteins E(spl)m3, E(spl)m5, E(spl)m7, E(spl)m8, E(spl)m, and E(spl)m␥ and