The sensory organs of the Drosophila adult leg provide a simple model system with which to investigate pattern-forming mechanisms. In the leg, a group of small mechanosensory bristles is organized into a series of longitudinal rows, a pattern that depends on periodic expression of the hairy gene (h) and the proneural genes achaete (ac) and scute (sc). Expression of ac in longitudinal stripes in prepupal leg discs defines the positions of the mechanosensory bristle rows. The ac/sc expression domains are delimited by the Hairy repressor, which is itself periodically expressed. In order to gain insight into the molecular mechanisms involved in leg sensory organ patterning, we have analyzed a Hedgehog (Hh)- and Decapentaplegic (Dpp)-responsive enhancer of the h gene, which directs expression of h in a narrow stripe in the dorsal leg imaginal disc (the D-h stripe). Our studies suggest that the domain of D-h expression is defined by the overlap of Hh and high-level Dpp signaling. We find that the D-h enhancer consists of a Hh-responsive activation element (HHRE) and a repression element (REPE), which responds to the transcriptional repressor Brinker (Brk). The HHRE directs expression of h in a broad stripe along the anteroposterior (AP) compartment boundary. HHRE-directed expression is refined along the AP and dorsoventral axes by Brk1, acting through the REPE. In D-h-expressing cells, Dpp signaling is required to block Brk-mediated repression. This study elucidates a molecular mechanism for integration of the Hh and Dpp signals, and identifies a novel function for Brk as a repressor of Hh-target genes.