We have shown that the expression of the 412 retrotransposon provides a useful early marker for the development of the gonadal mesoderm in Drosophila embryos. 412 is initially expressed in a set of parasegmentally repeated stripes from parasegments (PS) 2-14 in the mesoderm at the extended germ band stage. During germ band retraction the bulk of 412 expression declines except in dorsolateral clusters of cells in PS10, 11 and 12, where high levels of 412 expression remain. These mesodermal cell clusters are associated with germ cells and subsequently they coalesce, rounding up to form the gonads. The gonadal mesoderm thus appears to originate specifically from three abdominal parasegments, PS10, 11 and 12. We show that the maintenance of high levels of 412 expression in gonadal mesoderm is not induced by contact with germ cells, but rather depends on genetic control by the homeotic genes abdominal-A and Abdominal-B.