We report the molecular cloning and characterization of pcdr (pigment cell dehydrogenase reductase), a Drosophila visual system-specific gene with novel properties of spatial, temporal and sexual regulation. Short chain dehydrogenase/reductases are a family of proteins that catalyze mechanistically conserved dehydrogenase/reductase reactions in a wide range of cells and tissues. These enzymes are required in a variety of reactions ranging from steroid metabolism and prostaglandin synthesis to alcohol detoxification. The Drosophila pcdr gene encodes a new member of this family, displaying 42% amino acid sequence identity to the mammalian prostaglandin dehydrogenase. pcdr expression is restricted to the visual system with very high levels found in the pigment cells. Interestingly, expression of pcdr mRNA is sexually dimorphic with males showing higher levels of expression than females. This sexual dimorphism is under the control of the sex differentiation cascade as transformer and transformer 2 mutations shift females to a male-like level of expression. Finally, we demonstrate that a region of 335 nucleotides including sequences upstream and just downstream of the transcription start is sufficient to reproduce the normal expression pattern.