Hes7, a bHLH gene essential for somitogenesis, displays cyclic expression of mRNA in the presomitic mesoderm (PSM). Here, we show that Hes7 protein is also expressed in a dynamic manner, which depends on proteasome-mediated degradation. Spatial comparison revealed that Hes7 and Lunatic fringe (Lfng) transcription occurs in the Hes7 protein-negative domains. Furthermore, Hes7 and Lfng transcription is constitutively up-regulated in the absence of Hes7 protein and down-regulated by stabilization of Hes7 protein. Thus, periodic repression by Hes7 protein is critical for the cyclic transcription of Hes7 and Lfng, and this negative feedback represents a molecular basis for the segmentation clock.