The zinc-finger transcription factor Senseless is co-expressed with basic helix-loop-helix (bHLH) proneural proteins in Drosophila sensory organ precursors and is required for their normal development. High levels of Senseless synergize with bHLH proteins and upregulate target gene expression, whereas low levels of Senseless act as a repressor in vivo. However, the molecular mechanism for this dual role is unknown. Here, we show that Senseless binds bHLH proneural proteins via its core zinc fingers and is recruited by proneural proteins to their target enhancers to function as a co-activator. Some point mutations in the Senseless zinc-finger region abolish its DNA-binding ability but partially spare the ability of Senseless to synergize with proneural proteins and to induce sensory organ formation in vivo. Therefore, we propose that the structural basis for the switch between the repressor and co-activator functions of Senseless is the ability of its core zinc fingers to interact physically with both DNA and bHLH proneural proteins. As Senseless zinc fingers are approximately 90% identical to the corresponding zinc fingers of its vertebrate homologue Gfi1, which is thought to cooperate with bHLH proteins in several contexts, the Senseless/bHLH interaction might be evolutionarily conserved.