A new developmental gene family, recently identified in D. melanogaster, has been called imaginal disc growth factors (IDGF) because the proteins promote growth of cell lineages derived from imaginal discs. These are the first genes reported that encode polypeptide factors with mitotic activity in invertebrates. Characteristics such as similar arrangement of introns and exons, small size, and different cytological localization make this family an excellent candidate for evolutionary studies. We focus on the loci Idgf1 and Idgf3, two genes that possess the most distinctive features. We examine the pattern of intra- and interspecific nucleotide variation in the sequences from 20 isogenic lines of D. melanogaster and sequences from D. simulans and D. yakuba. While MK, HKA, and Tajima's tests of neutrality fail to reject a neutral model of molecular evolution, Fu and Li's test with outgroup and McDonald's test suggest that balancing selection is modulating the evolution of the Idgf1 locus. The rate of recombination between the two loci is high enough to uncouple any linkage disequilibrium arising between Idgf1 and Idgf3, despite their close physical proximity.