The initiation of mesoderm differentiation in the Drosophila embryo requires the gene products of twist and snail. In either mutant, the ventral cell invagination during gastrulation is blocked and no mesoderm-derived tissue is formed. One of the functions of Snail is to repress neuroectodermal genes and restrict their expressions to the lateral regions. The derepression of the neuroectodermal genes into the ventral region in snail mutant is a possible cause of defects in gastrulation and in mesoderm differentiation. To investigate such possibility, we analysed a series of snail mutant alleles. We found that different neuroectodermal genes respond differently in various snail mutant background. Due to the differential response of target genes, one of the mutant alleles, V2, that has reduced Snail function showed an intermediate phenotype. In V2 embryos, neuroectodermal genes, such as single-minded and rhomboid, are derepressed while ventral invagination proceeds normally. However, the differentiation of these invaginated cells into mesodermal lineage is disrupted. The results suggest that the establishment of mesodermal cell fate requires the proper restriction of neuroectodermal genes, while the ventral cell movement is independent of the expression patterns of these genes. Together with the data showing that the expression of some ventral genes disappear in snail mutants, we propose that Snail may repress or activate another set of target genes that are required specifically for gastrulation.