The JAK/STAT pathway is a non-receptor tyrosine kinase signaling pathway that is well conserved and highly re-utilized in many mammalian and Drosophila developmental processes. Compared to dozens of ligands and receptors in mammalian JAK/STAT, Drosophila JAK/STAT pathway is simpler with one receptor and three ligands, Upd, Upd2 and Upd3, which have similar amino acid sequences. Previous literature shows that upd and upd2 exhibit the same dynamic striped expression pattern in embryos and have semi-redundant functions during embryogenesis. Do Upd and Upd3 also have redundant functions? To answer this question, the functions of Upd3 in Drosophila development were investigated in this dissertation. In addition, the coordinate expression mechanism of upd and upd3 in eye discs was also analyzed. To study the functions of Upd3 in development, the expression pattern of upd3 was examined and detected in larval eye discs, wing discs, haltere discs, lymph glands and adult ovaries with in situ hybridization to upd3 mRNA and an upd3 reporter line. Consistent with the expression pattern, the loss of function mutants of upd3 exhibit small eyes, outstretched wings, downward extended halteres and reduced circulating blood cell concentration, demonstrating the roles of Upd3 in these tissues’ development. However, functions of Upd3 in other aspects of immune response were not detected. To investigate the mechanism of the coordinate expression of upd and upd3, the genetic and molecular relationship of upd, upd3 and os was dissected. The os alleles, oso, oss and os1, are a group of classical alleles which display outstretched wings, small eyes, or both, respectively. The genetic complementation tests of upd, upd3 and os showed that both upd and upd3 failed to complement os while upd complemented upd3, suggesting functions of both upd and upd3 are affected in os alleles. Consistent with the genetic tests, the expression of upd and upd3 in eye discs is lost in os allele. Molecularly, putative enhancer regions are deleted at the 5’ end of upd3 in os alleles. Hence, a transcriptional co-regulation model of upd and upd3 is proposed in which upd and upd3 share a common cis-regulatory region, lesions of which cause the os phenotype.