vrille and Par domain protein 1 (Pdp1) epsilon constitute the second transcriptional feedback loop in Drosophila circadian clock system. Their rhythmic expression is controlled by Drosophila Clock (dClk) gene, and they feed back to negatively and positively, respectively, regulate the oscillating transcription from dClk gene. In this study, we characterized the functional domains of PDP1 epsilon in vitro using a panel of deletion mutants and showed that PDP1 epsilon basic leucine zipper domain can act as a dominant-negative (DN) mutant of wild-type PDP1 epsilon. In transgenic flies, the inhibition of PDP1 epsilon activity by PDP1(DN) expression or PDP1 epsilon knock-down resulted in arrhythmic circadian behavior with altered dorsal projections from small ventral lateral neurons. We propose that one of PDP1-target genes may be involved in the formation of neural connection between the pacemaker cells and their targets for maintaining the rhythmicity of adult locomotor activity under free-running condition. (C) 2007 Elsevier Inc. All rights reserved.