We report herein the isolation of ccf, a new gene located in region 82E and essential for Drosophila development. This gene, expressed throughout development, encodes a novel product of 68 kDa which is found in the nucleus during interphase and labels, in a novel pattern, centrosomes and chromosome arms during mitosis. Mutations in ccf give rise to late larvae with small imaginal discs and to adults showing appendages of reduced size, consistent with CCF involvement in cell proliferation. Neuroblast squash analyses show that CCF is required for proper condensation of mitotic chromosomes and, therefore, for progression through mitosis. Furthermore, we observe that adult ccf mutants as well as animals overexpressing CCF during larval stages exhibit homeotic transformations. We also find that mutations in the Pc-G genes Polycomb, polyhomeotic and Enhancer of zeste are enhanced by ccf mutations. Finally, we show that the CCF protein binds to specific sites on polytene chromosomes, many of which are shared with the Posterior sex combs Pc-G protein. Together, these results suggest a role for the CCF protein in the maintenance of chromosome structure during mitosis and interphase.